Freed Response To Motion To Dismiss

US DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
DONALD FREED,
Plaintiff, Case No.: 17-cv-13519
Honorable Bernard A. Friedman
v. Magistrate Patricia Morris
MICHELLE THOMAS, sued in her RESPONSE

official and individual capacities;
and COUNTY OF GRATIOT,
Defendants
/
OUTSIDE LEGAL COUNSEL PLC
OUTSIDE LEGAL COUNSEL PLC CUMMINS MCLOREY DAVIS &

PHILIP L. ELLISON (P74117) ACHO
www.olcplc.com
Counsel for Plaintiff ALLAN C. VANDER LAAN (P33893)

PO Box 107 Attorneys for Defendants
Hemlock, MI 48626 2851 Charlevoix Dr, S.E., Ste 327
(989) 642-0055 Grand Rapids, MI 49546
pellison@olcplc.com (616) 975-7470
avanderlaan@cmda-law.com
RESPONSE IN OPPOSITION TO MOTION TO DISMISS
NOW COMES Plaintiff DONALD FREED, by counsel, and opposes the
motion to dismiss filed by Defendants pursuant to Fed.R.Civ.P. 12(b)(1)
claiming a lack of subject matter jurisdiction in this Court. For the reasons
outlined in the attached brief, the Court is requested to deny the improper
motion and direct Defendants to file an answer forthwith.
1
CONCISE STATEMENT OF THE ISSUES PRESENTED
The district courts shall have original jurisdiction of any civil action...
[t]o redress the deprivation, under color of any State law, statute, ordinance,
regulation, custom or usage, of any right, privilege or immunity secured by
the Constitution of the United States. 28 U.S.C. 1343(a)(3). Every person
who, under color of any statute, ordinance, regulation, custom, or usage, of
any State... subjects, or causes to be subjected, any citizen of the United
States or other person within the jurisdiction thereof to the deprivation of any
rights, privileges, or immunities secured by the Constitution and laws, shall
be liable to the party injured in an action at law, suit in equity, or other proper
proceeding for redress... 42 U.S.C. 1983. See Coleman v District of
Columbia, 70 F.Supp.3d 58 (DDC 2014)
Does this Court lack subject matter jurisdiction over Plaintiff Donald
Freeds constitutional challenge to the non-return of his equity beyond the
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amount of taxes and administrative expenses owed to and retained by

Defendants?
Answer: No; Coleman v Dist. of Columbia, 70 F.Supp.3d 58 (DDC 2014)
2
CONTROLLING / APPROPRIATE AUTHORITY FOR RELIEF SOUGHT
Coleman v Dist. of Columbia, 70 F.Supp.3d 58 (DDC 2014)

Rafaeli, LLC v. Oakland County, No. 330696, 207 W.L. 4803570 (Mich. Ct.
App. Oct. 24, 2017)
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3
BRIEF IN OPPOSITION
FACTS
Plaintiff Donald Freed is a resident of the County of Gratiot in the State
of Michigan and owned Parcel No. 13-026-006-10 commonly known as 7706
Bliss Rd, Elwell, MI 48832 (hereinafter the Freed Property). ECF No. 1,
Compl, 1,7. The Freed Property was the home of Plaintiff Donald Freed
which rests on approximately 35 acres of land. Id., 8. It was worth

approximately $97,000.00 by the Countys own records. Id., 10.

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It is undisputed that Plaintiff Donald Freed then owed a mere $735.43
in past due taxes, together with administrative expenses, costs and interest
to total $1,109.06. Id., 11. Defendant MICHELLE THOMAS sought and
obtained a tax foreclosure judgment from the Michigan Circuit Court for the
County of Gratiot seizing the entire property ownership interests of Plaintiff
Donald Freed for the past due amount of $1,109.06 related to Freed
Property. Id., 15. The County then sold the Freed Property at auction, for
$42,000.00 to a third party. Id., 16. The past due $1,109.06 tax bill was paid
from the proceeds. However, Defendant MICHELLE THOMAS and
Defendant COUNTY OF GRATIOT refused to return the excess equity
beyond the unsatisfied tax debt and administrative expenses, costs, and
interest of $1,109.06 and have appropriated real propertys equity worth
4
$97,000.00 for public use by Defendant COUNTY OF GRATIOT. Because
the sale is completed and no further legal action is left under the States
taxing scheme, Plaintiff Donald Freed brought a two-count complaint in this
Court. Critically, he did not challenge the validity or the amount of the tax
owed. He is not seeking to have this Court recalculate, refigure, or re-
determine the amount of this taxes. Instead, he asserts that Defendants
MICHELLE THOMAS and COUNTY OF GRATIOT, acting under the color of

law of the State of Michigan, subjected Plaintiff Donald Freed to the

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deprivation of rights, privileges, or immunities secured by the Constitution,
namely both the Fifth (via the Fourteenth) Amendment as a taking and the
Eighth Amendment as a violative excessive fine. This Court has original
jurisdiction to hear any case in which seeks to redress the deprivation, under
color of any State law, statute, ordinance, regulation, custom or usage, of
any right, privilege or immunity secured by the Constitution of the United
States. 28 U.S.C. 1343(a)(3). The Defendants moved to dismiss this
constitutional challenge on the grounds that this Court lacks jurisdiction to
decide issues of constitutional law. This opposition now follows.
5
ARGUMENT
Plaintiff Freed has brought this case at this time premised on two
recent court decisions, one federal and one state: Coleman v District of
Columbia, 70 F.Supp.3d 58 (2014) and Rafaeli LLC v Oakland County, No.
330696, 207 W.L. 4803570 (Mich. Ct. App. Oct. 24, 2017). Copies of both
are attached hereto. These cases are addressed herein.
TAX INJUNCTION ACT

First, Defendants argue this Court lacks jurisdiction because the Tax
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Injunction Act applies. The TIA states:
The district courts shall not enjoin, suspend or restrain the assessment,
levy or collection of any tax under State law where a plain, speedy and
efficient remedy may be had in the courts of such State.
28 U.S.C. 1341. The statute has limited applicability to deprive federal
courts of jurisdiction. See Direct Mktg Assn v Brohl, 135 S Ct 1124, 1130
(2015)(rejecting field preclusion argument and held TIA is limited to certain
class of tax-related actions). While it is a legal vehicle to limit drastically
federal district court jurisdiction to interfere with so important a local concern
as the collection of taxes, Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522
(1981), it does not expressly bar all lawsuits that relates to tax collection,
however. The TIA acts to only apply to two closely related, state-revenue-
protective objectives:
6
(1) to eliminate disparities between taxpayers who could seek
injunctive relief in federal court usually out-of-state corporations
asserting diversity jurisdiction and taxpayers with recourse only to
state courts, which generally required taxpayers to pay first and litigate
later; and
(2) to stop taxpayers, with the aid of a federal injunction, from

withholding large sums, thereby disrupting state government finances.
Hibbs v. Winn, 542 U.S. 88, 104 (2004). Hibbs articulated the narrow scope
of claims that are subject to the TIAs bar, holding that it does not bar claims
that relate generally to state tax administration; rather, the relief sought
must disrupt the collection of revenue by operat[ing] to reduce the flow of

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state tax revenue. Id. at 105-106. Upon reviewing the TIAs history, the
Supreme Court in Hibbs concluded that:
Congress trained its attention on taxpayers who sought to avoid paying

their tax bill by pursuing a challenge route other than the one specified
by the taxing authority. Nowhere does the legislative history announce
a sweeping congressional direction to prevent federal-court
interference with all aspects of state tax administration.
Id. at 104-105 (quotation marks omitted). In sum, this Court has interpreted
and applied the [TIA] only in cases Congress wrote the [TIA] to address, i.e.,
cases in which state taxpayers seek federal-court orders enabling them to
avoid paying state taxes. Id. at 107. The Sixth Circuit has followed the same.
BellSouth Telecomms. v. Farris, 542 F.3d 499, 501 (6th Cir. 2008)(TIA bars
only claims in which state taxpayers seek federal-court orders enabling
them to avoid paying state taxes.).
7
In simple terms, Plaintiff Donald Freed is not asking the Court to avoid
paying taxes, or enter a court order nullifying his prior property tax obligation
of $1,109.06, or enjoin the assessment, levy, or collection of any tax, but
rather deal with the amounts seized in excess of or outside the tax bill of
$1,109.06. The tax of $1,109.06 has already and fully been assessed, levied,
and collected (see Coleman discussed below), and Plaintiff Freed is not
seeking to enjoin, suspend, or restrain the same before it occurs or to

invalidate the same. What Plaintiff now seeks is monetary damages and
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other relief on the failure to return the excessive equity funds beyond what
were his past due taxes. The actions of Defendants beyond collection of tax
of $1,109.06 results in the illegal seizure of excessive property interests (i.e.
equity) in excess of taxes that were assessed, levied, or collected, and the
seizure of the same violates the Fifth, Eighth, and Fourteenth Amendments
to the United States Constitution to which this Court has jurisdiction, under
28 U.S.C. 1343, to remedy. The TIA does not bar such a claim in this Court.
This Court is requested to follow and adopt as its own the analysis of
District Judge Sullivan in Coleman Through Bunn v Dist. of Columbia, 70
F.Supp.3d 58 (DDC 2014) in applying these argumentsa near identical
surplus equity case. Coleman is eerily identical to the circumstances in this
case. The state-actor defendants in Coleman tried to argue the same TIA
8
theory as done in the current surplus equity case. Judge Sullivan rejected
the state actors argument:
The District's first jurisdictional argument is that Counts One and Three
of Mr. Colemans Complaint which seek damages for the loss of
surplus equity and a declaratory judgment that the relevant provisions
of the D.C. Code are unconstitutional challenge the legality of the
District of Columbia's system for collecting property taxes in violation
of the Tax Injunction Act, 28 U.S.C. 1341, and the related principle
of comity... Mr. Coleman claims that Counts One and Three do not
challenge the Districts collection of property taxes at all, but instead
are addressed at the separate taking of a homeowner's surplus equity.
***
Mr. Coleman does not seek a court order nullifying his property tax
obligation.... Accordingly, if Mr. Coleman won this lawsuit, no tax
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would be removed from the Districts coffers. For that reason, the Tax
Injunction Act does not bar his claims.
Coleman, supra, at 66-67, 68. Plaintiff Freed is just like the plaintiff in
Coleman and is not seeking to challenge collection of his actual tax owed
but rather the separate taking of a homeowners (i.e. his) surplus equity.
Like Mr. Coleman, if Plaintiff Freed won this lawsuit, no tax would be
removed from the Countys coffersit undisputedly keeps the $1,109.06.
Also like the plaintiff in Coleman, Plaintiff Freed does not challenge the
[governments] right to collect the tax owed; the amount of the tax, interest,
expenses or penalties owed; or the right of the [governments] taxing
authorities to foreclose on his property to recover that debt; [a]ll he
challenges is the taking of property that was indisputably not owed for taxes
... [i.e.] the amount in excess of the tax owed. Id., at 69. Because of such,
9
Coleman correctly concludes that this case is outside the narrow applicability
of the TIA. Again, the TIA does not bar claims that relate only generally to
state tax administration. Hibbs, supra, at 105-106. Courts still have power to
correct certain constitutional wrongs. This Court is requested to follow the
rationale in Coleman and find that the TIA (or as discussed below, comity)
does not bar this Courts jurisdiction.
The Plain, Speedy, Efficient Remedy Exception

To the extent this Court would reject the well-reasoned holding of

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Coleman, Plaintiff Freed asserts that the TIA still does not apply for an
alternate reason. While spoken in broad terms, the TIA only applies to bar
federal jurisdiction for state tax cases where a plain, speedy and efficient
remedy may be had in the courts of such State. 28 U.S.C. 1341. If there
is no plain, speedy and efficient remedy, the TIA does not act as a bar. See
California v Grace Brethren Church, 457 U.S. 393, 411 (1982). However,
Defendants confuse the concept of available remedy with available claim.
Recently the Sixth Circuit explained that only when the states do not provide
a plain, adequate, and complete remedy [not claim] in their own courts
should the federal courts be able to exercise jurisdiction despite the
principles of comity. Wayside Church v Van Buren County, 847 F. 3d 812,
822 (6th Cir. 2017)(citing Chippewa Trading Co. v. Cox, 365 F.3d 538, 641
10
(6th Cir. 2004 and Fair Assessment in Real Estate Assn v McNary, 454 U.S.
100, 116 (1981)).1
Defendants fail to point any existing plain, adequate, and complete
remedy following the Rafaeli decision. First, Defendants did not explain nor
offer any statutory or administrative path or process that Plaintiff Freed could
take or could have taken under state law; this is because there is no statutory
or administrative process to obtain a refund for the excess equity taken

beyond the amount of the due tax under Michigan law. Second, there is now
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no longer a judicial claim that can be filed to seek return of the amount as a
taking following the Rafaeli decision. A state court takings case is now futile.
While true that Michigan state courts will permit, generally, constitutional
challenges, Michigan law recently expressed it will not recognize any remedy
for these types of takings involving excess equity, as Rafaeli so now directly
holds. In Rafaeli, another victim taxpayer made the same argument being
advanced by Plaintiff Freed, i.e. that the Michigan tax statute is
unconstitutional because it mandates that governmental entities retain
proceeds beyond those required to satisfy delinquent tax bills. ECF No. 1-4,
Compl, Ex D, p. 5. The Michigan courts flatly rejected this constitutional
1 Wayside Church (issued Feb 10, 2017) was decided before the Michigan courts
rejected the takings remedy via Rafaeli (issued Oct 24, 2017).
11
challenge and refused to provide a remedy, and instead held that treasurers
and counties can retain the excess equity without constitutional problems.
Thuslyand in addition to the non-existence of any administrative refund
mechanismMichigan law does not recognize any such judicial remedy in
this instance and therefore Defendants cannot, any longer, argue that a
plain, speedy and efficient remedy exists under Michigan state law or through
her courts. Following Rafaeli, the state courts doors to the courthouse are
closed to such claims to as being advanced in this case.2 As such, this Court
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is now free to independently review the constitutionality of seizing excess
equity due to the absence of a plain, speedy and efficient remedy in
Michigans courts.3,4
RIPENESS
Next, Defendants argue that this case is not ripe under the Williamson
County doctrine. First, the Williamson County doctrine only applies to takings
2 Wayside Church was decided before Rafaeli and the Sixth Circuit did not have
the pronouncement of Michigans judiciary in Rafaeli as part of its analysis under the TIA.
3 As such, Plaintiffs allegations in his complaint are correct: in this instance, no
state court inverse condemnation or taking procedure is available by operation of

Michigan case law. Why? Rafaeli bars any such remedy in Michigan courts. And this
Court is called upon to correct the grave constitutional error of Michigans courts with a
federal remedy.
4 This is perhaps why the Defendants want to be in state court; state courts are
viewed (and rightfully so after Rafaeli) as taking all possible stepseven

unconstitutional onesto protect any incoming dollars that fund and run courts in an era
of tight governmental budgets.
12
claims, not excessive fines claims under the Eighth Amendment. See
Williamson County Regional Planning Commn v Hamilton Bank of Johnson
City, 473 U.S. 172 (1985). In blunt terms, Plaintiffs non-takings claims, like
the Eighth Amendment excessive fines claim, are not subject to takings
ripeness rules under the Williamson County doctrine. Id.
However, Defendants did not provide the complete picture of the
ripeness test under Williamson County. First, Williamson Countys state

court exhaustion requirement is a prudential principle, and is not

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jurisdictional; federal courts can decline to apply it as appropriate. Sansotta
v. Town of Nags Head, 724 F.3d 533, 545 (4th Cir. 2013); see also Wayside
Church, supra, at 818 (the Williamson County test is not strictly jurisdictional
but only prudential, and need not be followed when its application would not
accord with sound process.). In this case, it is unnecessary, inefficient, and
unsound to require Plaintiff Freed to seek a state court compensation
judgment that will not crystalize his claim any further or will provided any
state level remedy especially in light of Rafaeli. When state court decisions
already reject or pre-reject compensation or takings-based relief in similar
circumstances, the case is already ripe for federal decision in federal courts.
Naegele Outdoor Advertising, Inc. v. City of Durham, 803 F.Supp. 1068
(M.D.N.C. 1992), affd, 19 F.3d 11 (4th Cir.), cert. denied, 513 U.S. 928
13
(1994); see also Coinston Corp. v Village of Hoffman Estates, 844 F.2d 461,
463 (7th Cir. 1988)(a takings suit is ripe in federal court if it is apparent the
state does not intend to pay compensation.). Rafaeli easily proves the State
of Michigan and her courts do not intend to pay just compensation on takings
of surplus equity. The Court should hold the entire case fit for review because
a Case or Controversy exists once the government has taken private
property without paying for it [and] whether an alternative remedy exists does
not affect the jurisdiction of the federal court. Horne v. Dept of Agriculture,
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133 S. Ct. 2053, 2062 fn.6 (2013)(emphasis added). There has been a
completed seizure and completed finalized sale of Plaintiff Freeds property
(see ECF No. 1-3, Ex C) and thus ripeness is not an issue because no further
events need to occur. The exploitation has been done (and enjoyed in full)
by Defendants; the question is whether it was legal.
Second, Williamson County does not act as a bar at all times; a plaintiff
is exempted from the prudential exhaustion requirement if he demonstrates
that the inverse condemnation procedure is unavailable or inadequate.
Daniels v. Area Plan Commn of Allen County, 306 F.3d 445, 456 (7th Cir.
2002)(citing Williamson County, 473 U.S. at 197); see also Washington
Legal Found. v. Legal Found. of Washington, 271 F.3d 835, 852
(2001)(discussing same).
14
Under Michigan law, per Rafaeli, a state inverse condemnation claim
is futile because Michigan does not recognize any remedy on the taking of
excess equityit simply reclassifies it as a too-bad-so-sad forfeiture. And as
stated in Defendants briefyes, Michigan courts recognize inverse
condemnation as a general claimbut it no longer will recognize any state
remedy for a takings claim regarding stolen or taken excess equitywhen
governmental entities retain the proceeds beyond those required to satisfy

delinquent tax bills. Thusly, a Michigan inverse condemnation procedure is

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unavailable or inadequate as applied to these circumstances due to Rafaeli.
As such, the case is ripe for this Court to adjudicate the matter now. This
case is not one where Plaintiff may resort to an administrative or legal
proceeding under state law. Those either do not exist (within the statute
itself) or the outcome is foreclosed (i.e. unavailable) because the courthouse
doors are closed on the takings argument due to Rafaeli. Due to unavailable
or inadequate processes for state takings proceedings per Rafaeli,
Williamson County does not prudentially bar this case from this Courts
jurisdiction. After Rafaeli, there is no longer any reasonable, certain, and
adequate provision for obtaining compensation under Michigan law. See
Kruse v Village of Chargrin Falls, 74 F.3d 694, 698 (6th Cir. 1996). The Sixth
Circuit agrees: a takings claim is ripe where a review of [Michigan] law has
15
revealed no reasonable, certain, and adequate provision for obtaining just
compensation that was available ... at the time of the alleged takings in this
case. Arnett v. Myers, 281 F.3d 552, 564 (6th Cir. 2002). In face of now
administrative procedures and no longer an available takings case per
Rafaeli, no reasonable, certain, and adequate provision exists under
Michigan law and thus Williamson County is no bar. As such, there is no
ripeness problem under Williamson County.

COMITY
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Lastly, Defendants argue the doctrine of comity serves as baseline
beyond the TIA and also bars jurisdiction in this Court. In other words, comity
stands as its own bottom and is substantially broader than the bar
imposed by the TIA. Chippewa Trading, supra, at 541. However, the
Supreme Court has recently tempered comitys reach by concluding that
[u]nlike the TIA, the comity doctrine is nonjurisdictional. Direct Mktg, supra,
at 1134. And moreover, like the TIA jurisprudence, federal court should
normally abstain from hearing the action as long as there is a plain,
adequate, and complete remedy available to the plaintiff in state courtthe
same standard under the TIA. See Fair Assessment, supra, at 116 fn.8.
For the same reasons outlined above, comity for tax cases does come
in play in this case because Plaintiff Freed is not asserting tax case, i.e. he
16
does not seek a court order nullifying his property tax obligation. He also
does not challenge the right to collect the tax owed; the amount of the tax,
interest, expenses or penalties owed; or the right of the [governments] taxing
authorities to foreclose on his property to recover that debt; [a]ll he
challenges is the taking of property that was indisputably not owed for taxes
... [i.e.] the amount in excess of the tax owed. Under Coleman and the tax
comity jurisprudence, this case is not about state taxes, but the theft of
property in excess of and outside of the tax owed. As such, the comity
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doctrine does not apply.
But even if the Court would see it otherwise, the comity doctrine does
not apply when there lacks a plain, adequate, and complete remedy in state
courts. Again, there is no administrative process Defendants can point to
obtain compensation or a remedy, and the courthouse doors are closed on
the takings argument due to Rafaeli. As such, comityas a prudential
conceptdoes not deprive this Court of jurisdiction.
CONCLUSION
Plaintiff has brought this case to this Court expressly because of the
Michigan Court of Appeals decision in Rafaeli now longer allows federal
courts to stick their head in the sand and direct litigants to state court for a
remedy. Why? We now know it results in the lack of a plain, adequate, and
17
complete remedy available to the plaintiff in Michigans state courts.5 For
these reasons and for all the reasons outlined in Coleman taking this case
outside of tax, this Court is requested to retain jurisdiction over this case and
deny the motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1). If, however,
the Court believes that now after Rafaeli that Michigan can somehow still
provide a plain, adequate, and complete remedy for a taking for excess
equity and ignore the quality analysis of Coleman, then this Court seemingly
would need to dismiss this case, without prejudice6, to permit Plaintiff to file
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this matter in state court.
Date: November 28, 2017 RESPECTFULLY SUBMITTED:
/s/ Philip L. Ellison

BY PHILIP L. ELLISON (P74117)
Counsel for Plaintiff
PO Box 107 Hemlock, MI 48626
(989) 642-0055
pellison@olcplc.com
5 The only way that Defendants can move forward in denying this Court jurisdiction
is to convince this Court that Michigan courts still provides a remedy post-Rafaelia
proposition that is clearly absurd. They will notconvince this Court that Rafaeli does not
say what is plainly expressed: no remedy for theft of excess surplus under state courts
processes.
6 If the court lacks subject matter jurisdiction, it should dismiss without prejudice.
In re Great Lakes Dredge & Dock Co., LLC, 624 F.3d 201, 209 (5th Cir. 2010); see also
Mitan v. Int'l Fidelity Ins. Co., 23 Fed. Appx. 292, 298 (6th Cir. 2001).
18
CERTIFICATE OF SERVICE
I hereby certify that on date stated below, I filed the foregoing
document with the ECF/CM system which will serve an email copy of the
same to all counsel of record (at their email address of record) on the date
stated below.
Date: November 28, 2017 RESPECTFULLY SUBMITTED:
/s/ Philip L. Ellison

BY PHILIP L. ELLISON (P74117)

Counsel for Plaintiff
PO Box 107 Hemlock, MI 48626
www.olcplc.com
(989) 642-0055
pellison@olcplc.com
19
INDEX OF EXHIBITS
Coleman Decision........................................................................... Exhibit A
Rafaeli Decision .............................................................................. Exhibit B

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A
70 F.Supp.3d 58 (2014)
Benjamin COLEMAN, THROUGH his Conservator, Robert BUNN, Plaintiff,

v.
DISTRICT OF COLUMBIA, Defendant.
Civil Action No. 13-1456 (EGS).
United States District Court, District of Columbia.
Signed September 30, 2014.
62 *62 William A. Isaacson, Boies, Schiller & Flexner LLP, Washington, DC, for Plaintiff.
Edward Paul Henneberry, Jr., Office of the Attorney General for DC, Washington, DC, for Defendant.
MEMORANDUM OPINION
EMMET G. SULLIVAN, United States District Judge.
In the District of Columbia, as in many other jurisdictions, a homeowner who fails to pay property taxes runs a great risk. A
delinquent property-tax bill becomes a lien, held by the District, on the homeowner's property. Continued failure to pay the
delinquent tax bill creates the risk that the District will sell the property to satisfy the taxes. This practice of engaging in "tax
sales" has long been recognized as a generally valid exercise of the government's power to collect taxes.
The devil, however, is in the details. In D.C., the tax-sale process begins with the sale at auction of a tax lien on the property
to a third party. The homeowner may satisfy that lien by paying his delinquent tax bill, but the purchaser of the lien is able to
add on top of that bill various costs, including attorney's fees. In Mr. Coleman's case, that caused what began as a $133.88
tax bill to become a total of over $5,000, all of which needed to be paid before the lien would be satisfied.
Once the lien is sold to the third party, a six-month waiting period begins, during which the homeowner may redeem his
home by paying the taxes, along with any penalties, costs, and interest that are owed. If the entire bill is not paid upon
expiration of the waiting period, the tax-lien purchaser may initiate proceedings in the Superior Court of the District of
Columbia to foreclose. The Superior Court is empowered to enter a judgment vesting a fee simple title in the property in the
tax-lien purchaser. In this way, a small sum paid to purchase the lien becomes full title to a property worth hundreds of
thousands of dollars (in this case, approximately $200,000). The key detail in this case is that D.C. law provides that any
surplus equity the homeowner has in his home is irrevocably lost, no matter how small the tax bill nor how valuable the
equity.
Mr. Coleman brings a limited challenge to this law. He does not seek to regain his home, does not dispute that the District
63 may use tax sales to satisfy delinquent property taxes, and agrees with the District *63 that he owed $133.88 in property
taxes, plus penalties, costs, and interest. Mr. Coleman's claim is against the District's taking of the entire equity in his home.
The District, he asserts, has provided him no compensation for the loss of that equity, even though its value far exceeds the
taxes, penalties, costs, and interest he owed.
Mr. Coleman claims that such a practice is forbidden by the Takings Clause of the Fifth Amendment to the United States
Constitution. Accordingly, he filed suit seeking an award of "just compensation," as well as a declaration from this Court that
the District's statute is unconstitutional. The District has moved to dismiss Mr. Coleman's Complaint, arguing that this Court
lacks jurisdiction for multiple reasons and that, in any event, Supreme Court precedent holds that the District's actions do
not violate the Takings Clause. The Court has considered the District's motion, the response and reply thereto, as well as
the applicable law and the entire record in this case. The Court also held a hearing on the motion to dismiss on September
26, 2014. The Court finds that it has jurisdiction over Mr. Coleman's claims and accordingly rejects all of the District's
jurisdictional arguments. The Court also rejects the District's argument that prior Supreme Court precedent has foreclosed
Mr. Coleman's claim under the Takings Clause. Accordingly, the Court DENIES the District's motion.
I. Background
A. Statutory Background
The District of Columbia's laws governing the procedure for collecting delinquent property taxes are codified in Chapter 13A
of title 47 of the D.C. Code. See Revised Real Property Tax Sales, D.C. Code 47-1330, et seq. On the day that a tax-
defined as "unpaid real property tax ... including penalties, interest, and costs," id. 47-1330(2)-becomes delinquent, the
D.C. Code declares that it "shall automatically become a lien on the real property." Id. 47-1331(a). The Code further
directs the District to "sell all real property on which the tax is in arrears unless otherwise provided by law." Id. 47-1332(a).
Such tax sales follow a procedure set out elsewhere in the statute. "At least 30 days before" any such sale is to be
advertised, "the Mayor shall mail to the person who last appears as owner of the real property on the tax roll ... a notice of
delinquency." Id. 47-1341(a). Once thirty days have passed "from the mailing of the notice of delinquency," the District
must advertise that the property "will be sold at public auction because of taxes." Id. 47-1342(a). At this public sale, the
District must sell the property "in its entirety," id. 47-1343, "to the purchaser who makes the highest bid." Id. 47-1346(a)
(2). Sales are not to be conducted "for less than the amount of the taxes," however. Id. 47-1346(c).
The purchaser receives "a certificate of sale," which describes the property and the sale, and indicates "[t]he amount of
taxes for which the real property was offered for sale." Id. 47-1348(a). The six months following the date of sale are a
redemption period, during which the purchaser may not foreclose the original owner's right to redeem the property. Id. 47-
1370(a). The original owner may redeem by paying to the District "the amount paid by the purchaser ... exclusive of surplus
with interest thereon," as well as "other taxes, interest, and penalties paid by a purchaser," and "expenses for which the
purchaser is entitled to reimbursement." Id. 47-1361(a). Interest on this amount is calculated at an annual rate of 18%. Id.
64 47-1334, 47-1361, 47-1377. If the original owner *64 makes sufficient payments to the District, the purchaser of the
certificate of sale "shall receive a refund of the payment" with interest. Id. 47-1354(b).
Once the six-month redemption period has passed, "a purchaser may file a complaint to foreclose the right of redemption of
the real property." Id. 47-1370(a). This action must be filed within one year of the date of sale of the lien, or the certificate
of sale becomes void. See id. 47-1355(a)(1). Even if such an action is pending, the original owner "may redeem the real
property at any time until the foreclosure of the right of redemption is final." Id. 47-1360. In adjudicating an action to
foreclose the right of redemption, the Superior Court may "[v]est title in fee simple in the purchaser." Id. 47-1370(b)(2).
The purchaser of the tax-sale certificate must bring the action against the original owner of the property and the District of
Columbia, as well as any entity with a particular interest in the property. See id. 47-1371(b)(1). The law permits the
Superior Court to issue a final judgment "foreclosing the right of redemption," which bars the original owner from redeeming
the property and vests in the purchaser a deed in fee simple. See id. 47-1382(a). In doing so, the law permits the taking of
not only the amount of delinquent taxes, plus any costs, fees, and interest, but also the entirety of the original owner's equity
in the property.[1]
B. Factual Background
Benjamin Coleman is a 76-year-old veteran. Compl., ECF No. 1 26. At all times relevant to this case, he "suffered from
severe dementia," id. 27, and this action is brought on Mr. Coleman's behalf by Robert Bunn, his guardian who was
appointed by the Superior Court "to manage Mr. Coleman's legal and financial affairs." Id. 15.
In 2006, Mr. Coleman failed to pay a $133.88 property tax bill on his home. Id. 28. The District placed a tax lien on Mr.
Coleman's home and added $183.47 in penalties to his preexisting tax obligation. Id. 29. The lien of $317.35 was
offered for sale at a public auction in July 2007, when it was sold to Embassy Tax Services, LLC ("Embassy"). Id. 30.
Embassy filed an action to foreclose Mr. Coleman's right of redemption on February 28, 2008. Id. 33. It demanded $4,999
in addition to the lien amount of $317.35 from Mr. Coleman. Id. 34. The additional amount was for "court costs, attorney's
fees, expenses incurred for personal service of process, expenses incurred for service of process by publication and fees
for the title search." Id. Embassy filed the action against Mr. Coleman, as well as the District, although the District "did not
file any specific claims or defenses." Id. 35.
On September 24, 2008, Mr. Coleman's son sent a handwritten letter to the Superior Court indicating "that he had recently
moved back into town and had discovered that his father was `living alone and had not kept to his medicine.'" Id. 37. Mr.
Coleman's son "offered to `get most of the payments in on Oct. 3, 2008.'" Id. The Superior Court ultimately held a status
65 hearing on March 11, 2009, after which it *65 gave Mr. Coleman until May 27, 2009 to complete his payments. Id. 38-39.
On May 26, 2009, Mr. Coleman's son sent another letter to the Superior Court, noting "that his father had `been under the
weather,' but that his father had paid all of the owed taxes." Id. 40. Mr. Coleman's son also "offered for his father to make
monthly payments of $850 beginning June 1, 2009" to satisfy the additional obligations to Embassy. Id. When no one
appeared for Mr. Coleman at the May 27, 2009 status hearing, the Court tried, unsuccessfully, to contact his son. See id.
41. The Court then adopted the proposed payment schedule, stayed the deadline for Mr. Coleman to redeem his property,
and directed Mr. Coleman and his son to appear for a June 24, 2009 hearing. Id. That hearing was rescheduled on multiple
occasions. Id. 42.
On March 31, 2010, Embassy moved for a default judgment, noting "Mr. Coleman's failure to appear, file a responsive
pleading or file a notice of interest in the property." Id. 43. The Superior Court granted the motion for a default judgment on
June 11, 2010 and issued a judgment "extinguishing any title, rights, claims and interests that Mr. Coleman had in the
property." Id. 44-45. The District of Columbia executed a deed to Embassy on August 31, 2010. See id. 46. The home
at that time "had a fair market value of approximately $200,000." Id.
On December 16, 2010, Embassy filed with the Superior Court a petition for writ of possession because Mr. Coleman
continued to reside in his home. Id. 47. On June 9, 2011, Embassy filed a complaint with the Superior Court's Landlord-
Tenant Branch and obtained a default judgment on June 22, 2011. Id. 48-49. Mr. Coleman was evicted on August 5,
2011. Id. 50. Embassy sold his home for $71,000 in October of 2011. Id. 51. He continues to reside in D.C, but "now
lives in a group home, a mile from his former house." Id. 15, 52.
C. Procedural History
On September 24, 2013, Mr. Coleman brought this lawsuit against the District of Columbia. See Compl., ECF No. 1. He
alleges that the District's tax-sale statute violates the Takings Clause of the Fifth Amendment to the United States
Constitution by taking a homeowner's surplus equity and transferring it to a private party without just compensation or public
purpose. Id. 2, 7. Mr. Coleman brings a three-count Complaint against the District. Count One seeks damages under 42
U.S.C. 1983. See id. 70-78. Count Two seeks "just compensation" under the Fifth Amendment. See id. 79-86.
Count Three seeks a declaratory judgment that the provisions of D.C. law "causing the sale of a home and all of its equity to
a third party are null and void as a violation of the Fifth Amendment." Id. 87-90.
On October 18, 2013, the District moved to dismiss. See Def.'s Mot. to Dismiss ("Mot."), ECF No. 5. Mr. Coleman filed his
opposition on November 22, 2013. See Pl.'s Opp. to Mot. to Dismiss ("Opp."), ECF No. 8. The District filed its reply in
further support of its motion on December 6, 2013. See Def.'s Reply in Supp. of Mot. to Dismiss ("Reply"), ECF No. 10. The
Court held a hearing on the motion to dismiss on September 26, 2014. The motion is now ripe for the Court's decision.
II. Standard of Review
A. Rule 12(b)(1)
A federal district court may only hear a claim over which it has subject matter jurisdiction; therefore, a Rule 12(b)(1) motion
66 for dismissal is a threshold challenge to a court's jurisdiction. On a *66 motion to dismiss for lack of subject matter
jurisdiction, the plaintiff bears the burden of establishing that the Court has jurisdiction. Lujan v. Defenders of Wildlife, 504
U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). In evaluating the motion, the Court must accept all of the factual
allegations in the complaint as true and give the plaintiff the benefit of all inferences that can be drawn from the facts
alleged. See Thomas v. Principi, 394 F.3d 970, 972 (D.C.Cir.2005). However, the Court is "not required ... to accept
inferences unsupported by the facts alleged or legal conclusions that are cast as factual allegations." Cartwright Int'l Van
Lines, Inc. v. Doan, 525 F.Supp.2d 187, 193 (D.D.C.2007) (quotation marks omitted).
B. Rule 12(b)(6)
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) "tests the legal sufficiency of a complaint." Browning v.
Clinton, 292 F.3d 235, 242 (D.C.Cir.2002). A complaint must contain "a short and plain statement of the claim showing that
the pleader is entitled to relief, in order to give the defendant fair notice of what the claim is and the grounds upon which it
rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quotation marks and
alteration omitted). While detailed factual allegations are not necessary, a plaintiff must plead enough facts "to raise a right
to relief above the speculative level." Id.
When ruling on a Rule 12(b)(6) motion, the court may consider "the facts alleged in the complaint, documents attached as
exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice."
Gustave-Schmidt v. Chao, 226 F.Supp.2d 191, 196 (D.D.C.2002). The Court must construe the complaint liberally in
plaintiff's favor and grant plaintiff the benefit of all reasonable inferences deriving from the complaint. Kowal v. MCI
Commc'ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994). The Court must not accept inferences that are "unsupported by the
facts set out in the complaint." Id. "Nor must the court accept legal conclusions cast in the form of factual allegations." Id. "
[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Ashcroft v. Iqbal, 556 U.S. 662, 679,
129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)
III. Analysis
A. The Court Has Jurisdiction Over Mr. Coleman's Claims.
The District argues that the Court lacks jurisdiction to hear Mr. Coleman's claims for four distinct reasons: (1) Counts One
and Three of the Complaint are barred by the federal and D.C. Tax Injunction Acts, 28 U.S.C. 1341 and D.C. Code 47-
3307, as well as the related principle of comity; (2) Count Two of the Complaint is not ripe for resolution; (3) the case is
precluded by the Rooker-Feldman doctrine; and (4) the case is barred by the doctrine of res judicata.
1. The Tax Injunction Act
The District's first jurisdictional argument is that Counts One and Three of Mr. Coleman's Complaint which seek damages
for the loss of surplus equity and a declaratory judgment that the relevant provisions of the D.C. Code are unconstitutional
challenge the legality of the District of Columbia's system for collecting property taxes in violation of the Tax Injunction
Act, 28 U.S.C. 1341, and the related principle of comity, as well as the D.C. Tax Injunction Act, D.C. Code 47-3307. Mr.
Coleman claims that Counts One and Three do not challenge the District's collection of property taxes at all, but instead are
67 addressed at the separate *67 taking of a homeowner's surplus equity. See Opp. at 26-29.
The Tax Injunction Act declares that "[t]he district courts shall not enjoin, suspend or restrain the assessment, levy or
collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State." 28
U.S.C. 1341.[2] The Act has been interpreted to bar not only injunctions, but also actions seeking declaratory judgments
regarding the validity of tax collection. See Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 299, 63 S.Ct. 1070,
87 L.Ed. 1407 (1943). Moreover, "[a]lthough the Supreme Court has not decided whether the Act itself covers damages
suits under 42 U.S.C. 1983, the Supreme Court has found `that taxpayers are barred by the principle of comity from
asserting 1983 actions against the validity of state tax systems in federal courts.'" Dist. Lock & Hardware, Inc. v. District of
Columbia, 808 F.Supp.2d 36, 39 (D.D.C.2011) (quoting Fair Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100, 116,
102 S.Ct. 177, 70 L.Ed.2d 271 (1981) (quotation marks, citations, and alterations omitted).
The Act is "first and foremost a vehicle to limit drastically federal district court jurisdiction to interfere with so important a
local concern as the collection of taxes." Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522, 101 S.Ct. 1221, 67 L.Ed.2d 464
(1981). This is not to say that the Act bars any lawsuit that relates to tax collection, however. As the Supreme Court recently
held, the Act reflects "two closely related, state-revenue-protective objectives":
(1) to eliminate disparities between taxpayers who could seek injunctive relief in federal court usually out-
of-state corporations asserting diversity jurisdiction and taxpayers with recourse only to state courts,
which generally required taxpayers to pay first and litigate later; and
(2) to stop taxpayers, with the aid of a federal injunction, from withholding large sums, thereby disrupting
state government finances."
Hibbs v. Winn, 542 U.S. 88, 104, 124 S.Ct. 2276, 159 L.Ed.2d 172 (2004).
In Hibbs, the Supreme Court articulated the narrow scope of claims that are subject to the Act, holding that it does not bar
claims that relate generally to "state tax administration"; rather, the relief sought must disrupt "the collection of revenue" by
"operat[ing] to reduce the flow of state tax revenue." Id. at 105, 106, 124 S.Ct. 2276. Upon reviewing the Act's history, the
Supreme Court concluded that "Congress trained its attention on taxpayers who sought to avoid paying their tax bill by
pursuing a challenge route other than the one specified by the taxing authority. Nowhere does the legislative history
announce a sweeping congressional direction to prevent federal-court interference with all aspects of state tax
administration." Id. at 104-05, 124 S.Ct. 2276 (quotation marks omitted). "In sum, this Court has interpreted and applied the
[Tax Injunction Act] only in cases Congress wrote the Act to address, i.e., cases in which state taxpayers seek federal-court
orders enabling them to avoid paying state taxes." Id. at 107, 124 S.Ct. 2276.
Courts have consistently applied the language of Hibbs that the Tax Injunction Act bars only claims "ìn which state
68 taxpayers seek federal-court orders enabling them to avoid paying state taxes,'" BellSouth Telecomms. *68 v. Farris, 542
F.3d 499, 501 (6th Cir.2008) (quoting Hibbs, 542 U.S. at 107, 124 S.Ct. 2276) (emphasis in original), or, phrased slightly
differently, that the Act applies only "to a lawsuit when the relief granted by a federal court will òperate to reduce the flow of
state tax revenue.'" Okla. ex rel. Okla. Tax Comm'n v. Int'l Reg. Plan, Inc., 455 F.3d 1107, 1112 (10th Cir.2006) (quoting
Hibbs, 542 U.S. at 106, 124 S.Ct. 2276) (emphasis added); see also Luessenhop v. Clinton Cnty., 466 F.3d 259, 266 (2d
Cir.2006); May Trucking Co. v. Or. Dep't of Transp., 388 F.3d 1261, 1267 (9th Cir.2004).
Mr. Coleman does not seek a court order nullifying his property tax obligation. Indeed, the District conceded at oral
argument that a ruling in Mr. Coleman's favor would not allow him to avoid paying any tax. Mr. Coleman further notes that
the D.C. Code provision at issue defines "tax" narrowly, to encompass "unpaid real property tax ... including penalties,
interest, and costs." D.C. Code 47-1330(2). Mr. Coleman concedes that those amounts were due; he seeks only the
surplus equity that remains after those amounts are paid. Accordingly, if Mr. Coleman won this lawsuit, no "tax" would be
removed from the District's coffers. For that reason, the Tax Injunction Act does not bar his claims.
The District argues that Mr. Coleman's claims must nonetheless be dismissed because their success would frustrate the
"collection" of taxes by holding the process by which the District collects property taxes unconstitutional. See Mot. at 10-11.
Under the District's view, the law's treatment of a homeowner's surplus equity is inextricably intertwined with the process by
which a tax lien is sold to a third party and a former homeowner's right to redeem the property itself is foreclosed upon. In
essence, forfeiting the equity is an extra incentive for the payment of taxes.
Courts have rejected the argument that the Tax Injunction Act bars challenges to such independent incentives. Indeed, the
Supreme Court in Hibbs discussed such a case, Judge Friendly's decision in Wells v. Malloy, 510 F.2d 74 (2d Cir.1975). See
Hibbs, 542 U.S. at 109, 124 S.Ct. 2276. In Wells, the plaintiff had failed to pay a state motor-vehicle tax and, as a
consequence, the state suspended his driver's license. See 510 F.2d at 76. The plaintiff brought a suit contesting the
constitutionality of that action, but "did not dispute that the tax was due and owing." Id. Judge Friendly held that the plaintiff "
[c]learly... is not seeking to restrain the àssessment' or `levy' of a tax under state law." Id. at 77. The state argued that the
plaintiff sought to restrain the "collection" of taxes, but Judge Friendly rejected a reading of that word "to include anything
that a state has determined to be a likely method of securing payment." Id. In using the word "collection":
Congress was referring to methods similar to assessment and levy, e.g., distress or execution, that would
produce money or other property directly, rather than indirectly through a more general use of coercive
power. Congress was thinking of cases where taxpayers were repeatedly using the federal courts to raise
questions of state or federal law going to the validity of the particular taxes imposed upon them not to a
case where a taxpayer contended that an unusual sanction for non-payment of a tax admittedly due violated
his constitutional rights, an issue which, once determined, would be determined for him and all others.
Id. (citations omitted). The plaintiff in Wells was thus not barred by the Tax Injunction Act. See id. For similar reasons, Mr.
69 Coleman's challenge to the District's *69 taking of the surplus equity in his home, above and beyond the amounts the
District has defined as the "tax," is not barred by the Tax Injunction Act.[3]
The District finds superficial support for its position in a handful of decisions that concluded that challenges to the legality of
a tax sale itself, which sought to recover the taxes that were paid, are barred by the Tax Injunction Act. These decisions are
easily distinguished. Most prominently, the District cites Wright v. Pappas, 256 F.3d 635 (7th Cir.2001), where a purchaser of
tax liens brought suit alleging that the county from which he purchased the liens had misrepresented the values of the
relevant properties for racially discriminatory reasons. See id. at 636. The plaintiff sought a "refund [of] the price he paid for
the certificates." Id. The Seventh Circuit held that "[a] lien sale is a mode of tax collection; and so an action to enjoin it, or
declare it illegal, or rescind it, or perhaps even just obtain damages on the ground of its illegality, would be barred." Id. at
637. The plaintiff was barred by the Tax Injunction Act because he "challenge[d] the mode of collection," and he sought a
refund of the purchase price he paid, which was the functional equivalent of the tax payment. See id.
Wright does not affect Mr. Coleman's claims because Mr. Coleman "does not challenge the District's right to collect the tax
owed; the amount of the tax, interest, expenses or penalties owed; or the right of the District's taxing authorities to foreclose
on his property to recover that debt." Opp. at 27. All he challenges is "the taking of property that was indisputably not owed
for taxes ... the amount in excess of the tax owed." Id. Unlike the plaintiff in Wright, then, Mr. Coleman neither seeks to
recover any tax that was paid (he concedes its validity), nor to "enjoin," "declare... illegal," "rescind," or "obtain damages on
the grounds of ... illegality" of the tax sale. Wright, 256 F.3d at 637.[4]
70 *70 2. Ripeness
The District's second jurisdictional argument maintains that Count II of plaintiff's Complaint, which seeks an award of just
compensation under the Takings Clause, "is premature" under the ripeness requirement inherent in all Takings Clause
claims. See Mot. at 12. For a Takings Clause claim to be ripe for judicial resolution, the plaintiff must show that: (1) "the
government entity charged with implementing the regulations has reached a final decision"; and (2) the plaintiff has sought
"compensation through the procedures the State has provided," which must be "reasonable, certain and adequate ... at the
time of the taking." Williamson Cnty. Reg'l Planning Comm'n v. Hamilton Bank, 473 U.S. 172, 186, 194, 105 S.Ct. 3108, 87
L.Ed.2d 126 (1985); see also 13B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure 3532.1.1 (3d
ed. 2014) ("There must be a final decision to `take,' and the plaintiff must show that there is no other remedy to provide
adequate compensation."). The District does not contest that there has been a final decision, and argues only that Mr.
Coleman has not pursued available state remedies.
The requirement that a plaintiff exhaust state compensation remedies exists because "[t]he Fifth Amendment does not
proscribe the taking of property; it proscribes taking without just compensation." Williamson, 473 U.S. at 194, 105 S.Ct.
3108. Accordingly, "the State's action is not complete in the sense of causing a constitutional injury unless or until the State
fails to provide an adequate postdeprivation remedy for the property loss." Id. at 195, 105 S.Ct. 3108 (quotation marks
omitted). The Supreme Court therefore found a takings claim unripe where state statutory law permitted "a property owner
[to] bring an inverse condemnation action to obtain just compensation for an alleged taking of property." Id. at 196, 105 S.Ct.
3108.
The analysis looks to potential "remedies under state substantive law." 13B Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure 3532.1 n.43 (3d ed. 2014) (emphasis added). In the absence of any such remedy, a plaintiff may
immediately bring his claim in federal court. See, e.g., Arnett v. Myers, 281 F.3d 552, 564 (6th Cir.2002) (takings claim was
ripe where "[t]his court's review of Tennessee law has revealed no reasonable, certain, and adequate provision for obtaining
just compensation that was available ... at the time of the alleged takings in this case"); Clajon Prod. Corp. v. Petera, 70
F.3d 1566, 1575 (10th Cir.1995) (where a state inverse-condemnation action was available only against government entities
with "the power to condemn land," and the challenged government entity "lacks the power of eminent domain" meaning that
it was "not subject to Wyoming's inverse condemnation procedure, Plaintiffs' takings claim is ripe for review"); Hoehne v.
Cnty. of San Benito, 870 F.2d 529, 533 (9th Cir.1989) (in an action alleging a taking in connection with the denial of a
subdivision application, claim was ripe because at the time of the denial "California law prohibited actions seeking just
compensation as a remedy for regulatory takings").
A plaintiff cannot ignore potential sources of state remedies, however. Where, for example, a state constitution contains its
71 own takings clause, courts have required plaintiffs to bring a claim under that provision first, even if the availability *71 of
just compensation has not been clearly established. See, e.g., Pascoag Reservoir & Dam, LLC v. Rhode Island, 337 F.3d
87, 93 (1st Cir.2003) ("The Rhode Island Constitution prohibits the taking of private property for public use without just
compensation and Rhode Island state courts have long allowed recovery through suits for inverse condemnation.");
Southview Assocs., Ltd. v. Bongartz, 980 F.2d 84, 100 (2d Cir.1992) (holding that the Vermont Constitution "recognizes a
cause of action for a taking generally, even if it has yet to decide whether recovery can be had for a regulatory taking,"
meaning that the plaintiff must first pursue such a claim); Austin v. City & Cnty. of Honolulu, 840 F.2d 678, 681 (9th Cir.1988)
(same under the Hawaii Constitution). Similarly, where a state's supreme court has indicated that inverse-condemnation is
available as a separate substantive claim, plaintiffs must first bring such a claim even if its contours are unclear. See, e.g.,
Culebras Enters. Corp. v. Rivera Rios, 813 F.2d 506, 513 (1st Cir.1987) (court decisions had indicated that the court "will
entertain an inverse condemnation action for damages when it believes that property is `taken' by unconstitutionally
excessive governmental regulations," although damages had never been awarded under the action); Littlefield v. City of
Afton, 785 F.2d 596, 609 (8th Cir.1986) (court had indicated that an inverse-condemnation action existed, although it was
limited "to cases where an injunction would not restore plaintiffs to their original status").
The District argues that "[l]andowners can bring an inverse condemnation action in the District of Columbia" and that Mr.
Coleman's failure to do so renders Count II of his Complaint unripe. See Mot. at 12. Mr. Coleman correctly notes that the
sole citation provided by the District in support of its argument that such a substantive claim exists is a reference to the term
"inverse condemnation" in a D.C. Court of Appeals opinion which addressed only a federal Takings Clause claim brought
pursuant to 42 U.S.C. 1983. See Potomac Dev. Corp. v. District of Columbia, 28 A.3d 531, 550-51 & n. 9 (D.C.2011). In
that decision, the D.C. Court of Appeals emphasized that "District law is not the basis of the cause of action pled in the
complaint, which invokes only 1983." Id. at 550. The Court noted that "earlier inverse condemnation cases applied Fifth
Amendment principles in deciding whether a taking has occurred and what compensation is just," and the two cases cited
by the D.C. Court of Appeals appear also to have relied on the Fifth Amendment. See Mamo v. District of Columbia, 934
A.2d 376, 378, 384-85 (D.C.2007); D.C. Redev. Land Agency v. Dowdey, 618 A.2d 153, 164 (D.C.1992). The D.C. Court of
Appeals, therefore, has provided no basis to infer the existence of an independent inverse-condemnation action under D.C.
law.
The possibility that a court could fashion such an action is not sufficient to render Mr. Coleman's claim unripe. See
Culebras, 813 F.2d at 513 (state supreme court had indicated that it would entertain such an action under certain
circumstances); Littlefield, 785 F.2d at 609 (same). Nor has the District identified any other potential source of a remedy. In
fact, it conceded at oral argument that it presented no other legal authority. The Court finds no basis to infer the existence of
such a remedy, either. The District does not have a constitution a common source for a state substantive remedy. See
Pascoag, 337 F.3d at 93; Southview, 980 F.2d at 100; Austin, 840 F.2d at 681. Further, the statute at issue in this case
expressly provides for the taking of plaintiff's surplus equity and contains no procedure for the recovery of that surplus.
72 Accordingly, *72 because there is no "reasonable, certain, and adequate" state remedy, Williamson, 473 U.S. at 194, 105
S.Ct. 3108, Mr. Coleman's claim is ripe for resolution.[5]
3. Rooker-Feldman
The District's third jurisdictional argument is that Mr. Coleman's case constitutes an unacceptable request that this Court
"review a judicial decision of the D.C. Superior Court, and ... adjudicate claims that are a direct result of the 2010
Foreclosure Judgment." Mot. at 13. Mr. Coleman counters that he has no objection to the Foreclosure Judgment and does
not seek to overturn that judgment or recover title to his property; rather, his objection is to the District's independent taking
of his surplus equity. See Opp. at 36-39.
This argument implicates the Rooker-Feldman doctrine, which "`prevents lower federal courts from hearing cases that
amount to the functional equivalent of an appeal from a state court.'" Magritz v. Ozaukee Cnty., 894 F.Supp.2d 34, 38
(D.D.C.2012) (quoting Gray v. Poole, 275 F.3d 1113, 1119 (D.C.Cir. 2002)). The Rooker-Feldman doctrine "is based on the
jurisdictional grant codified in 28 U.S.C. 1257, which authorizes only the Supreme Court to exercise appellate jurisdiction
over state court judgments." Liebman v. Deutsche Bank Nat'l Trust Co., No. 13-1392, 2014 WL 526712, at *3 (D.D.C. Feb.
11, 2014).
The doctrine began in a 1923 case in which a plaintiff sought "to have a judgment of a circuit court in Indiana, which was
affirmed by the Supreme Court of the state, declared null and void, and to obtain other relief dependent on that outcome."
Rooker v. Fidelity Trust Co., 263 U.S. 413, 414, 44 S.Ct. 149, 68 L.Ed. 362 (1923). The Supreme Court found that the
plaintiffs' request was "plainly not within the District Court's jurisdiction as defined by Congress." Id. at 415, 44 S.Ct. 149.
The Supreme Court revisited the doctrine in 1983 when two individuals challenged the D.C. Court of Appeals' denial of their
bar applications pursuant to a rule that all applicants must prove that they graduated from an approved law school. See
D.C. Court of Appeals v. Feldman, 460 U.S. 462, 463-65, 103 S.Ct. 1303, 75 L.Ed.2d 206 (1983). The Supreme Court held
that the Court of Appeals' consideration and denial of the plaintiffs' applications was "judicial in nature" and thus could not
be reviewed in the district court. See id. at 479-82, 103 S.Ct. 1303. The Court held that the district court also lacked
jurisdiction over plaintiffs' challenges to the Court of Appeals' denial of their "petitions for waiver" of the rule, which relied on
an alleged "former policy of granting waivers," because those decisions were "inextricably intertwined with the District of
Columbia Court of Appeals' decisions, in judicial proceedings, to deny the respondents' petitions." Id. at 486-87, 103 S.Ct.
1303. The Supreme Court went on to hold, however, that "[t]o the extent that [plaintiffs] mounted a general challenge to the
73 constitutionality of [the Court of Appeals' rule requiring that applicants prove they had graduated from an approved *73 law
school] the District Court did have subject matter jurisdiction over their complaints." Id. at 482-83, 103 S.Ct. 1303.
In 2005, the Supreme Court clarified that Rooker-Feldman is a limited doctrine that "is confined to cases of the kind from
which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court
judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those
judgments." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005).
Rooker-Feldman does not "stop a district court from exercising subject-matter jurisdiction simply because a party attempts
to litigate in federal court a matter previously litigated in state court," even if "a federal plaintiff presents some independent
claim ... that denies a legal conclusion that a state court has reached in a case to which he was a party." Id. at 293, 125
S.Ct. 1517 (quotation marks and alteration omitted).
The use in Feldman of the phrase "inextricably intertwined" had created some definitional problems, but Exxon clarified that
issue as well. The phrase was intended to mean only "that a district-court challenge to [a state-court decision] would be
barred even if the challenge was based on a ground not raised in the [state-court] proceeding." Campbell v. City of Spencer,
682 F.3d 1278, 1282 (10th Cir. 2012). Accordingly, "[w]hen the state-court judgment is not itself at issue, the Rooker-
Feldman doctrine does not prohibit federal suits regarding the same subject matter, or even the same claims, as those
presented in the state-court action," nor does it "bar an action just because it seeks relief inconsistent with, or even
ameliorative of, a state-court judgment." Campbell, 682 F.3d at 1281 (quotation marks and alteration omitted). "The
essential point is that barred claims are those complaining of injuries caused by state-court judgments. In other words, an
element of the claim must be that the state court wrongfully entered its judgment." Id. at 1283 (quotation marks omitted).
"In assessing the applicability of the Rooker-Feldman doctrine ... the fundamental and appropriate question to ask is
whether the injury alleged by the federal plaintiff resulted from the state court judgment or is distinct from that judgment."
Long v. Shorebank Dev. Corp., 182 F.3d 548, 555 (7th Cir.1999) (quotation marks omitted). In conducting this inquiry,
"federal courts cannot simply compare the issues involved in the state-court proceeding to those raised in the federal-court
plaintiff's complaint, but instead must pay close attention to the relief sought by the federal-court plaintiff." Exec. Arts Studio
v. City of Grand Rapids, 391 F.3d 783, 793-94 (6th Cir.2004) (quotation marks omitted; emphases in original).
Here, the dispute centers on how Mr. Coleman's claims are characterized. To the District, he attacks directly the 2010
Foreclosure Judgment, making this a clear attempt to obtain review of a state-court judgment. Even though Mr. Coleman's
Takings Clause argument was not addressed in the 2010 proceedings, if he sought to have that judgment overturned in this
Court, he would be barred by Rooker-Feldman. Indeed, the District rightly notes that direct attacks on state-court
foreclosure judgments are barred by Rooker-Feldman. See, e.g., Magritz, 894 F.Supp.2d at 38-39 (plaintiff's challenge to
the tax sale of his property was barred by Rooker-Feldman because he directly "question[ed] the validity of the underlying
2001 Judgment of Foreclosure").
74 *74 The plaintiff contends that his claim is more nuanced than the District presents. "Mr. Coleman does not seek review or
rejection in this case of the Superior Court judgment entered in favor of Embassy Tax Services and against him," he "does
not contend that the Superior Court committed error and does not seek relief from its judgment," "Mr. Coleman seeks
damages and declaratory relief due to the District's unconstitutional statute and taking." Opp. at 37. Thus, Mr. Coleman
challenges the District's statutory scheme insofar as it provides for the taking, not of a foreclosed property, but of the entirety
of the equity in that property, without recourse for a taxpayer to recover the amount of that equity less any taxes, penalties,
costs, and interest owed.
The District relies heavily on a 1993 decision of the Seventh Circuit, which held that Rooker-Feldman barred federal-court
jurisdiction over a takings claim that a local government had unconstitutionally retained the entire proceeds of a tax sale.
See Ritter v. Ross, 992 F.2d 750, 751-52, 754-55 (7th Cir.1993). In that case, the plaintiffs "admit[ted] that but for the tax lien
foreclosure judgment ... they would have no complaint: they would still have their land and would have suffered no injury."
Id. at 754. "The state court proceedings, as the Plaintiffs themselves state, àre the subject of this case.'" Id. The Seventh
Circuit thus concluded that "their claims ... are inextricably intertwined with the merits of that proceeding." Id. at 755
(emphasis added). As Mr. Coleman noted at oral argument, Ritter relied on the "inextricably intertwined" language, which
was narrowed significantly in 2005 by the Supreme Court's Exxon decision.
More instructive is the Ninth Circuit's recent decision in Bell v. City of Boise, 709 F.3d 890 (9th Cir.2013), which permitted
plaintiffs who had been convicted of violating an ordinance outlawing "camping" in public places to bring a federal
constitutional claim for retrospective damages regarding the alleged unconstitutionality of that ordinance. See 709 F.3d at
896-97. Although the plaintiffs sought remedies for the allegedly unconstitutional enforcement of the ordinance against them
in the form of expungement of their state-court convictions and damages related to "criminal fines" and "costs of
incarceration" arising out of those convictions, the Ninth Circuit emphasized that "even if a plaintiff seeks relief from a state
court judgment, such a suit is a forbidden de facto appeal only if the plaintiff also alleges a legal error by the state court." Id.
at 894, 897. "Although Plaintiffs sought relief designed to remedy injuries suffered from a state court judgment, they did not
allege before the court that the state court committed legal error, nor did they seek relief from the state court judgment
itself"; instead, they "assert as a legal wrong an allegedly illegal act by an adverse party the City's allegedly
unconstitutional enforcement of the Ordinances." 709 F.3d at 898 (quotation marks and alteration omitted).
Mr. Coleman's claim for compensation for the taking of his surplus equity in the property survives Rooker-Feldman because
he does not challenge the Foreclosure Judgment, but the District's allegedly unconstitutional enforcement of the statute
providing for a taking of his surplus equity. In the language of Bell, Mr. Coleman's claim is not "a direct challenge to a state
court's factual or legal conclusion." Id. at 897. Indeed, Mr. Coleman alleges no legal error by the Superior Court. As
discussed previously, he accepts the Foreclosure Judgment, the loss of his real property, and the satisfaction of his "tax"
debts. See supra Part III.A.1. Just as the Bell plaintiffs sought damages that grew out of their state-court prosecution, Mr.
75 Coleman seeks damages that, while related in some *75 sense to the Foreclosure Judgment, are distinct from it.[6]
4. Res Judicata
The District's final jurisdictional argument is that Mr. Coleman's claims are barred by the doctrine of res judicata because
they "could have been raised in an earlier action but were not." Mot. at 16. To determine whether res judicata applies, the
Court must look to the Full Faith and Credit Act, which provides that judgments of the courts of any state, territory, or
possession "shall have the same full faith and credit in every court within the United States and its Territories and
Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken."
28 U.S.C. 1738. This means that a state-court judgment receives "`the same respect that it would receive in the courts of
the rendering State.'" Herrion v. Children's Hosp. Nat'l Med. Ctr., 448 Fed.Appx. 71, 72 (D.C.Cir.2011) (quoting Matsushita
Elec. Indus. Co. v. Epstein, 516 U.S. 367, 373, 116 S.Ct. 873, 134 L.Ed.2d 6 (1996)). The parties agree that, under D.C.
law, the Court must determine whether res judicata applies by looking to: "(1) whether the claim was adjudicated finally in
the first action; (2) whether the present claim is the same as the claim which was raised or which might have been raised in
the prior proceeding; and (3) whether the party against whom the plea is asserted was a party or in privity with a party in the
prior case." Calomiris v. Calomiris, 3 A.3d 1186, 1190 (D.C.2010) (quotation marks omitted). It is undisputed that Mr.
Coleman's claims were not actually litigated in a prior proceeding.
The District argues that Mr. Coleman's claims are nonetheless barred by res judicata because the Superior Court "rendered
a final judgment on the merits relating to the tax sale purchaser's Motion for Entry of Default Judgment" and Mr. Coleman
could have raised his Takings Clause claims in that action. See Mot. at 17-19. Mr. Coleman responds that he could not have
asserted his claims against the plaintiff in the Superior Court case, the purchaser of the tax lien, and the District was a co-
defendant, against whom he had no obligation to raise a cross-claim. See Opp. at 31-32.
In Superior Court, cross-claims are permissive:
A pleading may state as a cross-claim any claim by 1 party against a co-party arising out of the transaction
or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to
any property that is the subject matter of the original action. Such cross-claim may include a claim that the
party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in
the action against the cross-claimant.
76 Super. Ct. R. Civ. P. 13(g). The effect of the nearly identical federal rule is that "a *76 party in a civil action is not precluded
from litigating a claim simply because it had an opportunity to raise the claim as a cross-claim in a prior suit to which it was
a party." CoreStates Bank, N.A. v. Huls Am., Inc., 176 F.3d 187, 199 (3d Cir.1999); see also RX Data Corp. v. Dep't of Soc.
Servs., 684 F.2d 192, 196 (2d Cir.1982); Hall v. Gen. Motors Corp., 647 F.2d 175, 184 (D.C.Cir.1980) (R.B. Ginsburg, J.)
(noting "the general rule that cross-claims are permissive, not compulsory"). The District conceded at oral argument that res
judicata generally would not bar a party from raising in a subsequent action a claim that would have been a cross-claim in a
prior action.
The District responds that although it and Mr. Coleman were co-defendants, their interests were so adverse that Mr.
Coleman should have raised his Takings Clause claims against the District in that proceeding. In support of this argument,
the District cites a handful of clearly distinct cases. Most prominently, the District cited Kolb v. Scherer Brothers Financial
Services Co., 6 F.3d 542 (8th Cir.1993), which treated co-defendants all of whom held mechanic's liens on a property
as adverse in an action brought by another lienholder. The Eighth Circuit noted that "it would be pure fiction to conclude that
no adversity in fact exists between the parties merely because they are all designated as defendants." Id. at 545. Under
Minnesota law, each defendant "makes the action his or hers, for the purpose of enforcing his or her lien" and "any
lienholder entitled to relief may pursue the foreclosure to its conclusion regardless of whether or not the nominal plaintiff
presents a viable lien claim." Id. (alterations omitted). The Eighth Circuit went on to note that "[a]ny party who files an
answer in a mechanic's lien action, though nominally a defendant, may actually function as a plaintiff with regard to other
named defendants." Id. The District also cited Eyde v. Charter Township of Meridian, 118 Mich.App. 43, 324 N.W.2d 775,
779 (1982), in which a plaintiff who had been a losing co-defendant with a town in an action by town residents seeking to
force a referendum on the town's re-zoning of the plaintiff's property was barred by res judicata in a subsequent suit against
the town seeking to obtain the re-zoning and enjoin the referendum because the subsequent suit raised arguments "to
defeat the action for a referendum" that could have been raised in the prior case and "[f]or purposes of [that] defense, the
Township and its residents were the same party."[7]
Mr. Coleman and the District were not adverse in the sense described in Kolb or Eyde. Though the District's sale of a tax
lien on Mr. Coleman's property rendered it adverse to Mr. Coleman in a colloquial sense, the District's presence as a
defendant in the Superior Court case was largely pro forma. The proceeding sought to determine whether Embassy could
foreclose Mr. Coleman's right of redemption, and the District had no property right to enforce against Mr. Coleman. This was
far from the Kolb parties, who all had competing property interests and, pursuant to state law, could "function as a plaintiff
77 with regard to the other named defendants." 6 F.3d at 545. Nor were the District and Embassy "the same party" for *77 the
purposes of any defense that Mr. Coleman may have raised in the Superior Court action. See Eyde, 324 N.W.2d at 779.
Just because Mr. Coleman and the District did not have identical interests does not make them sufficiently adverse to
trigger a compulsory counterclaim. Accordingly, Mr. Coleman was not required to raise his Takings Clause claims against
the District and is not barred by res judicata from doing so now.
B. Mr. Coleman Has Stated a Claim for a Violation of the Takings Clause.
In addition to its jurisdictional arguments, the District argues that Mr. Coleman fails to state a claim for a violation of the
Takings Clause. Plaintiff's theory is that the District has effected an unconstitutional taking by precluding him entirely from
obtaining the surplus equity in his home that remains after subtracting the taxes, penalties, costs, and interest he owed. Mr.
Coleman's argument implicates a series of Supreme Court decisions applying the Takings Clause to tax sales.
The story begins in 1881. That year, the Supreme Court had occasion to interpret a federal statute that permitted the federal
government to engage in tax sales to recover delinquent tax debts. See United States v. Taylor, 104 U.S. 216, 218, ___
S.Ct. ___, 26 L.Ed. 721 (1881). The Court interpreted the statute to mean that the former owner "would be entitled to the
surplus money" after the tax sale. See id. This statutory interpretation became relevant three years later in United States v.
Lawton, 110 U.S. 146, 3 S.Ct. 545, 28 L.Ed. 100 (1884). In that case, an heir to an individual whose property was sold
under the same statute sought "surplus proceeds of the sale" and was denied. Id. at 149, 3 S.Ct. 545. In light of the fact that
the statute required that the surplus be provided to that individual, the Supreme Court stated that "[t]o withhold the surplus
from the owner would be to violate the fifth amendment to the constitution, and deprive him of his property without due
process of law or take his property for public use without just compensation." Id. at 150, 3 S.Ct. 545.
In 1956, the Supreme Court revisited the issue in Nelson v. City of New York, 352 U.S. 103, 77 S.Ct. 195, 1 L.Ed.2d 171
(1956). In that case, the City of New York had utilized a tax-sale procedure. See id. at 105-06, 77 S.Ct. 195. The City
retained one of the properties at issue and retained the proceeds of the sale of the other property, which "far exceed[ed] in
value the amounts due." Id. at 109, 77 S.Ct. 195. The plaintiffs alleged that this constituted a violation of the Due Process
Clause and the Takings Clause. See id. As to the takings issue, the Supreme Court examined Lawton, but noted that "the
statute involved in that case had been construed... to require that the surplus be paid to the owner." Id. at 110, 77 S.Ct. 195.
The Nelson Court stated:
But we do not have here a statute which absolutely precludes an owner from obtaining the surplus proceeds
of a judicial sale. In City of New York v. Chapman Docks Co., an owner filed a timely answer in a foreclosure
proceeding, asserting his property had a value substantially exceeding the tax due. The Appellate Division
construed [the tax-sale statute] to mean that upon proof [that the sale value substantially exceeded the
amount of taxes due] a separate sale should be directed so that the owner might receive the surplus.
Id. (citation omitted). The statute had therefore previously been interpreted to provide an avenue for the recovery of surplus
equity. The Supreme Court went on:
78 *78 What the City of New York has done is to foreclose real property for charges four years delinquent and,
in the absence of timely action to redeem or to recover[] any surplus, retain the property or the entire
proceeds of its sale. We hold that nothing in the Federal Constitution prevents this where the record shows
adequate steps were taken to notify the owners of the charges due and the foreclosure proceedings.
Id. (emphasis added).
Mr. Coleman seizes on the first quote "we do not have here a statute which absolutely precludes an owner from obtaining
the surplus" to argue that Nelson does not foreclose his claim. The District focuses on the second upholding the
retention of "the entire proceeds of its sale" due to "the absence of timely action to redeem or to recover[] any surplus." Id.
Mr. Coleman's view of Nelson is correct. The Supreme Court clearly held open the question presented by Mr. Coleman
when it noted "[b]ut we do not have here a statute which absolutely precludes an owner from obtaining the surplus proceeds
of a judicial sale." Id. The subsequent language cited by the District does not foreclose Mr. Coleman's claim because D.C.
provides no action to recover any surplus.[8] Mr. Coleman's claims, therefore, are not foreclosed by Nelson.
The story resumes in 1969. In Balthazar v. Mari Limited, 301 F.Supp. 103 (N.D.Ill.1969), a three-judge panel of the U.S.
District Court for the Northern District of Illinois was presented with a case in which the plaintiffs alleged a violation of the
Due Process and Takings Clauses when their property was sold in a tax sale, pursuant to a statute which held that "when
an owner fails to redeem [his property]... the purchaser [of the tax lien] may obtain the property for a fraction of its market
value, thus gaining as a windfall all surplus value which exceeds the land's tax and interest liabilities. Id. at 104-05. The only
mention of the Takings Clause in the district court's decision was in a footnote, which did not mention Nelson and stated:
"Relying upon Supreme Court condemnation cases, plaintiffs also maintain that they were deprived of `just compensation'
for their property. These cases are inapplicable. Rather than taking private property for a public purpose, Illinois is here
collecting taxes which are admittedly overdue." Id. at 105 n. 6.
The Supreme Court summarily affirmed the judgment of the district court without elaboration. See Balthazar v. Mari Ltd.,
396 U.S. 114, 90 S.Ct. 397, 24 L.Ed.2d 307 (1969). The Court's Opinion stated only: "The motions to affirm are granted and
the judgment is affirmed. Mr. Justice Douglas is of the opinion that probable jurisdiction should be noted." Id. at 114, 90
S.Ct. 397. The District argues that this forecloses Mr. Coleman's claims because, it believes, the claim presented in
Balthazar was identical to Mr. Coleman's. This argument is tenuous from the outset because "[a]n unexplicated summary
affirmance settles the issue for the parties, and is not to be read as a renunciation by this Court of doctrines previously
announced in our opinions after full argument." Mandel v. Bradley, 432 U.S. 173, 176, 97 S.Ct. 2238, 53 L.Ed.2d 199 (1977)
(quotation marks omitted). A summary affirmance operates to "reject the specific challenges presented in the statement of
79 jurisdiction," "prevent[s] *79 lower courts from coming to opposite conclusions on the precise issues presented and
necessarily decided by those actions," and "should not be understood as breaking new ground but as applying principles
established by prior decisions to the particular facts involved." Id. Accordingly, "[a] summary disposition affirms only the
judgment of the court below, and no more may be read ... than was essential to sustain that judgment." Anderson v.
Celebrezze, 460 U.S. 780, 785, n. 5, 103 S.Ct. 1564, 75 L.Ed.2d 547 (1983).
The jurisdictional statement filed with the Supreme Court by the plaintiffs in Balthazar claimed that "[t]he court below[] relied
solely on a misapprehension of this Court's opinion in Nelson v. New York. In that case[,] this Court upheld a statutory tax
deed system because it met the requirements of due process as it provided a means for excess value over the delinquency
to go to the benefit of the property owner." Jurisdictional Statement, Balthazar v. Mari Ltd., No. 593, 1969 WL 136737, at *2
(U.S. Sept. 15, 1969). The plaintiffs asserted that they presented the question "[w]hether the Illinois `tax deed' statute is
invalid as allowing confiscation of property without an opportunity for just compensation," especially in light of the fact that "
[t]here is no way under the Illinois statute for an owner who is unable to redeem to obtain his equity above his tax debt." Id.
at *2, 4.
The District argues that this is evidence that the Supreme Court viewed the Balthazar statute as no different from the
Nelson statute, but that is entirely at odds with Nelson itself, which expressly reserved the question whether a tax sale law
with no avenue for recovery of the surplus would be constitutional. As Mr. Coleman notes, it would be odd to "assume that
the Court silently determined the question that it specifically reserved in Nelson." Opp. at 24. Moreover, Balthazar differs
from Mr. Coleman's case in a number of ways that make its summary affirmance unhelpful. First, the remedies sought in
each case differ significantly. Mr. Coleman seeks just compensation and a corresponding declaratory judgment. The
plaintiffs in Balthazar did not sue a defendant that could have paid just compensation, Balthazar, 301 F.Supp. at 103, and
they appear to have sought an injunction because their case was brought pursuant to a jurisdictional statute providing for a
three-judge panel to hear applications for injunctions "`restraining the enforcement, operation or execution of any state
statute.'" Opp. at 24-25 n.2 (quoting 28 U.S.C. 2281) (repealed 1976).
Given the narrow interpretation accorded summary affirmances which Justices have recently described as "a rather
slender reed on which to rest future decisions," Morse v. Republican Party of Va., 517 U.S. 186, 203 n. 21, 116 S.Ct. 1186,
134 L.Ed.2d 347 (1996) (quotation marks omitted), and as "carr[ying] little more weight than denials of certiorari," Hohn v.
United States, 524 U.S. 236, 260, 118 S.Ct. 1969, 141 L.Ed.2d 242 (1998) (Scalia, J., dissenting) these factual
distinctions and the Supreme Court's express reservation of the relevant question in Nelson counsel in favor of reading the
summary affirmance in Balthazar narrowly, to hold that the injunctive relief sought against defendants who could not pay just
compensation was not warranted. This holding, even if undisturbed by subsequent doctrinal developments, does not
foreclose Mr. Coleman's claim.
Only a handful of post-Balthazar decisions have addressed a federal Takings Clause claim regarding the taking of equity
80 *80 without avenue for its recovery.[9] Three decisions have denied such claims on the grounds that Nelson foreclosed such
a claim. See Reinmiller v. Marion Cnty., No. CV-05-1926, 2006 WL 2987707, at *3 (D.Or. Oct. 16, 2006); City of Auburn v.
Mandarelli, 320 A.2d 22, 32 (Me.1974); Ritter v. Ross, 207 Wis.2d 476, 558 N.W.2d 909, 912 (1996).[10] All three, however,
recognized that such a claim could be stated where a state statute or constitutional provision granted an interest in the
surplus equity. See Reinmiller, 2006 WL 2987707, at *3; City of Auburn, 320 A.2d at 32; Ritter, 558 N.W.2d at 912-13.[11]
This Court draws two clear principles from the Supreme Court's decisions in Lawton and Nelson. Nelson makes clear that a
Takings Clause violation regarding the retention of equity will not arise when a tax-sale statute provides an avenue for
recovery of the surplus equity. 352 U.S. at 109, 77 S.Ct. 195. Lawton makes clear that a Takings Clause violation will arise
when a tax-sale statute grants a former owner an independent property interest in the surplus equity and the government
fails to return that surplus. 110 U.S. at 149, 3 S.Ct. 545. The question Mr. Coleman's case presents is: What if the tax-sale
statute does not provide a right to the surplus and the statute provides no avenue for recovery of any surplus? A property
interest in equity could conceivably be created by some other legal source. In that circumstance, failure to provide an
avenue for recovery of the equity would appear to produce a result identical to Lawton: Property to which an individual is
legally entitled has been taken without recourse.[12] The issue, then, is whether Mr. Coleman has a property interest in his
equity and, if so, whether an unconstitutional taking of that property has been alleged.
81 *81 The Fifth Amendment to the United States Constitution provides, in relevant part, "nor shall private property be taken for
public use, without just compensation." Inherent in the Amendment, then, is that "property" must be at issue. "Because the
Constitution protects rather than creates property interests, the existence of a property interest is determined by reference
to èxisting rules or understandings that stem from an independent source such as state law.'" Phillips v. Wash. Legal
Found., 524 U.S. 156, 164, 118 S.Ct. 1925, 141 L.Ed.2d 174 (1998) (quoting Bd. of Regents v. Roth, 408 U.S. 564, 577, 92
S.Ct. 2701, 33 L.Ed.2d 548 (1972)). Lawton indicated that such an interest may be created by a statute that requires the
refunding of surplus equity after a tax sale. See Lawton, 110 U.S. at 149, 3 S.Ct. 545. Mr. Coleman contended that he has a
protected property interest in the equity in his home based on principles of D.C. law and decisions of the D.C. Court of
Appeals. See Opp. at 18 (citing Lewis v. Lewis, 708 A.2d 249 (D.C.1998); Gore v. Gore, 638 A.2d 672 (D.C.1994)). Mr.
Coleman similarly argued that he establishes the remaining elements of a Takings Clause claim: that his property was
"taken"; that he was provided no "just compensation"; and that the taking was not for a "public purpose." See id. at 18-22.
The Court need not and indeed cannot address the viability of these arguments because the District failed to respond
to them. Neither its motion nor its reply brief challenged whether Mr. Coleman satisfied the elements of a Takings Clause
claim. Instead, the District declared that "[t]he District's substantive defense is based on the Supreme Court's treatment of
tax sale foreclosure statutes in decisions that [the District claims] are directly on point. There is no reason to defend a tax
sale foreclosure statute as a Fifth Amendment taking because no court has found that to be the appropriate analysis." Reply
at 15. "Because the District failed to address these [issues] in its motion ànd fail[ed] to respond to Plaintiff's point[s] in its
Reply, the Court will deem [them] abandoned at least for now.'" McGinnis v. District of Columbia, No. 13-1254, 65 F.Supp.3d
203, 224, 2014 WL 4243542, at *15 (D.D.C. Aug. 28, 2014) (quoting Ashraf-Hassan v. Embassy of France, 878 F.Supp.2d
164, 173-74 (D.D.C. 2012)); see also Lewis v. United States, No. 90-991, 1990 WL 179930, at *2 (D.D.C. Oct. 29, 1990); cf.
Herbert v. Nat'l Acad. of Sciences, 974 F.2d 192, 196 (D.C.Cir.1992) (noting the court's "dependence as an Article III court
on the adversarial process for sharpening the issues for decision" as a reason to decline to consider arguments newly
raised in a reply brief). Accordingly, the Court must assume that Mr. Coleman established the existence of an independent
property interest in the equity in his home, as well as the remaining elements of a Fifth Amendment Takings Clause claim.
IV. Conclusion
For the foregoing reasons, the District's motion to dismiss is DENIED. An appropriate Order accompanies this
Memorandum Opinion.
[1] The Court notes that subsequent legislation by the Council of the District of Columbia will alter the process in many ways. Most
importantly, legislation that is scheduled to take effect in October 2014 grants homeowners whose homes are sold at tax auction and
subsequently foreclosed upon a right to recover a substantial portion of the equity they had in their homes. See Residential Real Property
Equity and Transparency Act, 62-31 D.C. Reg. 7763 (Aug. 1, 2014).
[2] Similarly, the D.C. Tax Injunction Act provides: "No suit shall be filed to enjoin the assessment or collection by the District of Columbia or
any of its officers, agents, or employees of any tax." D.C. Code 47-3307.
[3] The Court need not resolve the dispute over whether a challenge to the adequacy of a foreclosure notice in the context of a tax sale is
barred by the Tax Injunction Act. Compare Luessenhop, 466 F.3d at 260-61 (Second Circuit holding that the "collection" of taxes was not at
issue where "[n]one of the plaintiffs dispute[d] the authority of the governmental body to collect the taxes due.... Neither d[id] they contest
the assessments of their property, or the amount of taxes claimed due"), and Burns v. Conley, 526 F.Supp.2d 235, 241 (D.R.I.2007)
(plaintiffs' challenge to the adequacy of notice of a pending tax sale was not barred by the Tax Injunction Act where the plaintiffs "do not
challenge the power of the town to levy sewer assessments and to conduct tax sales; they would have paid the taxes had they received
notice"), with Dist. Lock & Hardware, 808 F.Supp.2d at 41-42 (challenge to adequacy of notice or a tax sale was barred by the Act because
it sought "to set aside of undo the sale" and was thus a challenge to the "collection" of taxes). A claim regarding the adequacy of notice of a
tax sale challenges an action that, arguably, is part of the tax sale itself. See Dist. Lock & Hardware, 808 F.Supp.2d at 41-42. Mr. Coleman
challenges nothing in the tax sale; rather, he argues that the independent statutory taking of his surplus equity was unlawful.
[4] For similar reasons, other cases cited by the District are distinct. See Schulz v. Williamson, 145 Fed.Appx. 704, 704 (2d Cir.2005) (Tax
Injunction Act barred action where the plaintiffs "sought to enjoin defendants from enforcing state tax laws by adding their names to a list of
delinquent taxpayers or foreclosing on their real property"); Miller v. District of Columbia, No. 06-1935, 2007 WL 1748890, at *3-4 (D.D.C.
June 18, 2007) (concluding that the Tax Injunction Act deprives the Court of "subject-matter jurisdiction over plaintiffs' challenge to the sale
of his properties at a tax auction and over his related request that the tax sale be `set aside'"); Dixon v. Oisten, No. 02-CV-72379, 2002 WL
31008840, at *3-4 (E.D.Mich. Aug. 20, 2002) (Tax Injunction Act barred an action when the plaintiff sought "to either redeem his property or
properties or to set aside the tax sale"), aff'd, 62 Fed.Appx. 105 (6th Cir.2003); United States v. Boyce, 153 F.Supp.2d 1194, 1196
(S.D.Cal.2001) (finding that a federal district court "is not the proper [forum] for any challenge ... regarding the validity of the [State
Franchise Tax Board's] tax liens").
[5] Although the District appeared to argue in its pleadings that Mr. Coleman must litigate his federal claim in the Superior Court before that
claim may become ripe for review in federal court, Reply at 8-10, the District conceded during oral argument that this is not the case. This
concession was appropriate, as it is hornbook law that plaintiffs need only resort to existing "remedies under state substantive law" and that
their federal claims "need not be presented to state courts." 13B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure
3532.1 n.43 (3d ed. 2014); see also, e.g., Front Royal & Warren Cnty. Indus. Park Corp. v. Town of Front Royal, 135 F.3d 275, 283 (4th
Cir.1998); Dodd v. Hood River Cnty., 59 F.3d 852, 860-61 (9th Cir.1995).
[6] The Court is not persuaded by the District's reliance on the Tenth Circuit's decision in Campbell. In that case, a plaintiff was barred by
Rooker-Feldman from bringing a Takings Clause claim to recover just compensation for the value of horses that had been the subject of a
state-court forfeiture proceeding. See 682 F.3d at 1279. The Tenth Circuit held that Rooker-Feldman barred that claim because "the
deprivation of property that was allegedly without just compensation ... was the deprivation ordered by the state court." Id. at 1284. The
forfeiture was an "act[] of the state court." Id. at 1285. Here, by contrast, Mr. Coleman does not challenge the deprivation ordered by the
Superior Court, he challenges the District's independent statutory taking of his surplus equity without avenue for recovery.
[7] The other cases cited by the District recited the general rule that co-parties may be considered adverse in certain situations, but either
held that it did not apply, Exec. Arts, 391 F.3d at 795 (res judicata did not apply because "the City and Executive Arts did not have any
controversy between themselves when the first decision was rendered"), or described factually distinct scenarios. See, e.g., Lesher v.
Lavrich, 784 F.2d 193, 194-95 (6th Cir.1986) (claim itself had been actually litigated in a prior proceeding).
[8] At oral argument, the District argued that Nelson overruled Lawton. As the District conceded, nothing in the language of Nelson
indicates that Lawton was being overruled. In fact, the Court in Nelson explained that its decision was consistent with Lawton, noting that
"the statute involved in that case had been construed ... to require that the surplus be paid to the owner." Id. at 110, 77 S.Ct. 195.
[9] The District cited a recent decision of the Second Circuit, but that decision did not address a Takings Clause claim at all; it analyzed the
due-process elements of Nelson and rejected a claim that the retention of the surplus from a tax sale infringed on "rights to due process
and equal protection." Miner v. Clinton Cnty., 541 F.3d 464, 475 (2d Cir. 2008).
[10] Courts have rejected Takings Clause challenges to tax sales themselves, but these decisions do not shed light on the meaning of
Nelson because the courts were not presented with claims regarding surplus equity. See, e.g., Speed v. Mills, 919 F.Supp.2d 122, 129
(D.D.C.2013); Indus. Bank of Wash. v. Sheve, 307 F.Supp. 98, 99 (D.D.C.1969).
[11] In addition, two Justices of the Supreme Court of New Hampshire indicated their belief that the federal Takings Clause and its New
Hampshire counterpart require the ability to recover surplus equity. See First N.H. Bank v. Town of Windham, 138 N.H. 319, 639 A.2d 1089,
1097-98 (1994) (Horton, J., concurring) ("May the taxing power include an arbitrary forfeiture, a movement of property to the State without
just compensation? I think not, and instead would subscribe to an interpretation of the tax lien enforcement provisions that would satisfy
these constitutional objections by limiting recovery to the obligation secured by the lien."). This position was ultimately adopted as an
interpretation of the New Hampshire Constitution. See Thomas Tool Servs., Inc. v. Town of Croydon, 145 N.H. 218, 761 A.2d 439, 441
(2000). Vermont interprets its constitution similarly. See Bogie v. Town of Barnet, 129 Vt. 46, 270 A.2d 898, 900-01 (1970).
[12] One of the decisions to interpret Nelson grasped this point in part when it held that where the government "retain[s] the entire amount
of the sale proceeds," the Takings Clause comes into play "only if the state constitution or tax statutes create [a property interest in the
surplus]." Ritter, 558 N.W.2d at 910, 912. The Wisconsin Court of Appeals "consider[ed] whether the [plaintiffs] had a property interest in the
excess proceeds of the foreclosure sale" and, upon concluding that they did not under Wisconsin law, denied their Takings Clause claim. Id.
at 912-13.
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B
RAFAELI, LLC, and ANDRE OHANESSIAN, Plaintiffs-Appellants,
v.
OAKLAND COUNTY and ANDREW MEISNER, Defendants-Appellees.
No. 330696.
Court of Appeals of Michigan.
October 24, 2017.
AARON D. COX, for RAFAELI, LLC, Plaintiff-Appellant.
WILLIAM H. HORTON, for OAKLAND COUNTY, Defendant-Appellee.
CHRISTOPHER J. RYAN, for OAKLAND COUNTY, Defendant-Appellee.
ANDREW FINK, for PACIFIC LEGAL FOUNDATION, Amicus Curiae.
Appeal from the Oakland Circuit Court, LC No. 2015-147429-CZ.
Before: MARKEY, P.J., and METER and SHAPIRO, JJ.
UNPUBLISHED
PER CURIAM.
Plaintiffs, Rafaeli, LLC, and Andre Ohanessian, appeal as of right an order granting summary disposition to defendants,
Oakland County and its treasurer Andrew Meisner, in this case involving the General Property Tax Act, MCL 211.1 et seq.[1]
We affirm.
Each plaintiff owned property on which defendants foreclosed because of tax delinquencies. Plaintiffs' lawsuit, styled as a
putative class action, alleged various constitutional violations. The trial court found no such violations and ruled, in
connection with a motion for summary disposition, that plaintiffs had forfeited their properties.
On appeal, plaintiffs first argue that the GPTA is unconstitutional on its face because it violates due process guarantees by
prescribing insufficient steps for a governmental entity to take when it knows or has reason to know that its efforts to provide
notice of tax delinquency to a taxpayer have failed.
This Court reviews de novo a trial court's decision regarding a motion for summary disposition. Ardt v Titan Ins Co, 233
Mich App 685, 688; 593 NW2d 215 (1999). We likewise review de novo issues of statutory or constitutional interpretation.
Janer v Barnes, 288 Mich App 735, 737; 795 NW2d 183 (2010).
The Michigan Supreme Court, recognizing the applicability of Jones v Flowers, 547 US 220, 225; 126 S Ct 1708; 164 L Ed
2d 415 (2006),[2] ruled in Sidun v Wayne Co Treasurer, 481 Mich 503, 505; 751 NW2d 453 (2008), that, where notices of
tax delinquencies were returned to a county treasurer as undeliverable, the county was not entitled to proceed with
foreclosure without undertaking "reasonable follow-up methods. . . ." The Court noted that "[r]easonable follow-up measures
directed at the possibility that the addressee had moved would be to post notice on the front door or to send notice
addressed to òccupant.'" Id. at 512. The Court also pointed out that, "although the government must take reasonable
additional steps to notify the owner, it is not required to go so far as to search for an owner's new address in the phonebook
and other government records such as income tax rolls." Id. (quotation marks, indications of alterations, and citation
omitted).
Plaintiffs argue that the GPTA falls short of the requirements of Jones and Sidun that foreclosing governmental units take
additional steps when knowing that attempts to serve notice have failed and that, therefore, the GPTA is unconstitutional on
its face. However, a statutory provision is not unconstitutional on its face unless there is no set of circumstances under
which it could be applied constitutionally. Bonner v City of Brighton, 495 Mich 209, 223 n 26; 848 NW2d 380 (2014); see
also Judicial Attorneys Ass'n v Michigan, 459 Mich 291, 303; 586 NW2d 894 (1998). The GPTA does not authorize
proceeding to foreclosure where notice consists of a single attempt at mailing known to have failed, but rather, it specifies
alternative means of identifying a valid address, mandates personal visits to the subject property, and sets forth
requirements for notice by publication. See MCL 211.78i. It is reasonable to presume that following the notice requirements
of the GPTA usually results in providing the affected taxpayer with actual notice of foreclosure proceedings. We reject
plaintiffs' claim of facial unconstitutionality.
Plaintiffs next argue that the GPTA, as applied to each plaintiff, resulted in a deprivation of constitutional due process in
connection with notice.
We do not agree. We note, initially, that under MCL 211.78i(10), "The failure of the foreclosing governmental unit to comply
with any provision of this section shall not invalidate any proceeding under this act if the owner of a property interest or a
person to whom a tax deed was issued is accorded the minimum due process required under the state constitution of 1963
and the constitution of the United States."
Plaintiffs' emphasis on Jones and Sidun notwithstanding, defendants did not simply rely on a mailing to an address they
learned was ineffective. Rafaeli paid taxes in August 2012 and January 2013 in response to notices of deficiencies sent to
its address as indicated on the subject property's deed, but a third such notice prompted no such response; apparently
defendants had no reason to doubt that that address ceased to be effective but for that lack of a response. Additional steps
then included a personal visit to the property, where notice was left with a tenant, plus the identification of a resident agent,
and notice sent to Rafaeli at the agent's address. Plaintiffs identify no major misstep on defendants' part when they
complain that notice sent to the corporation's identified resident agent's address was addressed to the corporation instead
of the agent. Further, plaintiffs specify no additional step defendants might have taken that would have better provided
Rafaeli with notice. The efforts defendants undertook to serve notice on Rafaeli satisfied the minimal requirements of due
process, insofar as the notice was intended to advise the corporation of its tax liabilities and that its property would be
subject to foreclosure proceedings to satisfy those liabilities.
Concerning Ohanessian, he paid taxes on his property for years before moving to California in 2011. Defendants sent
notices of tax delinquencies to Ohanessian's former Michigan address in June 2013, December 2013, and February 2014.
Defendants filed with their motion for summary disposition an affidavit from their chief of tax administration, who attested
that notices were sent to both of the addresses on file for Ohanessian, respectively in Livonia and Eastpointe, but that the
treasurer's office had no record of any California address for that taxpayer. The affidavit further reported that "the Treasurer
published three notices of the properties subject to foreclosure in the 2013 foreclosure case: December 27, 2013, January
3, 2014 and January 10, 2014."
The validity of the foreclosure depended not on perfect compliance with the GPTA, but on satisfying minimal constitutional
due process requirements. MCL 211.78i(10). By pointing out that defendants' agent failed to arrange for return receipt in
connection with notice sent by certified mail, plaintiffs essentially admit that defendants had no reason, but for the lack of a
response, to doubt that the attempted mail service was successful. Further, plaintiffs offer no basis for doubting defendants'
chief of tax administration's account of having published notice on three occasions. Here again, defendants did not simply
rely on a mailing they knew was unsuccessful.
Regardless, to the extent that the United States Supreme Court's admonishment that "when mailed notice of a tax sale is
returned unclaimed, the State must take additional reasonable steps to attempt to provide notice" is applicable, so is the
qualification that such additional steps are required only "if it is practicable to do so." Jones, 547 US at 225 (emphasis
added). And, as was the case with regard to plaintiff Rafaeli, plaintiffs specify no additional reasonable step defendants
might have taken that would have better provided Ohanessian with notice.[3] For these reasons, we conclude that the efforts
defendants undertook to serve notice on Ohanessian satisfied the minimal requirements of due process, insofar as the
notice was intended to advise him of his tax liabilities and that his property would be subject to foreclosure proceedings to
satisfy those liabilities.[4]
Plaintiffs next argue that defendants' administration of the GPTA's show-cause hearing requirement, see MCL 211.78j,
"allows them to play judge, jury, and executioner without any of the procedural safeguards required by the Due Process
Clause." Plaintiffs contend that the show-cause hearings deprive a delinquent taxpayer of a meaningful opportunity to be
heard because of the way defendants conduct the hearings.
We agree with defendants that plaintiffs do not have standing to raise this issue. In Michigan, a party has standing if it has a
legal cause of action, if the party is seeking declaratory relief and satisfies the requirements of the pertinent court rule, or "if
the litigant has a special injury or right, or substantial interest, that will be detrimentally affected in a manner different from
the citizenry at large or if the statutory scheme implies that the Legislature intended to confer standing on the litigant."
Lansing Sch Ed Ass'n v Lansing Bd of Ed, 487 Mich 349, 372; 792 NW2d 686 (2010).
Plaintiffs did not participate in any show-cause hearings below, and so suffered no injury from the manner in which such
hearings are conducted. Although they put forward the attendant lost opportunity to "show cause why absolute title to that
property should not vest in the foreclosing governmental unit" as required by MCL 211.78j(2) as one of the consequences of
their allegedly not having received adequate notice, for purposes of this issue they object in general terms to how
defendants purportedly conduct show-cause hearings. Further, plaintiffs explain neither how they came to understand how
defendants normally conduct such business, nor why they are so certain that, had they appeared for their show-cause
hearings, defendants would have prevented them from exercising their statutory right to show cause in fact.
Plaintiffs insist that they are entitled to declaratory relief in this regard. According to MCR 2.605(A)(1), "In a case of actual
controversy within its jurisdiction, a Michigan court of record may declare the rights and other legal relations of an interested
party seeking a declaratory judgment, whether or not other relief is or could be sought or granted." A court is thus
authorized to entertain an action for declaratory judgment where "necessary to guide a plaintiff's future conduct in order to
preserve the plaintiff's legal rights." Citizens for Common Sense in Gov't v Attorney General, 243 Mich App 43, 55; 620
NW2d 546 (2000). However, because plaintiffs did not participate in the show-cause hearing offered by defendants, their
objections are based on a hypothetical scenario. See id.
In addition, plaintiffs' having missed their opportunity to participate in a show-cause hearing in connection with their
respective parcels rendered moot any questions concerning how well such a hearing would have comported with the statute
requiring them. "A case is moot when it presents only abstract questions of law that do not rest upon existing facts or
rights." B P 7 v Bureau of State Lottery, 231 Mich App 356, 359; 586 NW2d 117 (1998). "As a general rule, an appellate
court will not decide moot issues." Id.
Because plaintiffs suffered no injury relating to how defendants conduct show-cause hearings, and can only speculate
concerning what might have transpired had they appeared for one and demanded their attendant statutory rights, and
because their having missed that opportunity in connection with their respective property interests rendered the issue moot,
we affirm the circuit court's decision not to grant relief with regard to this issue.
Plaintiffs next argue that the GPTA is unconstitutional because it mandates that governmental entities retain proceeds
beyond those required to satisfy delinquent tax bills; they argue that the GPTA therefore allows unconstitutional takings. We
disagree. This issue is easily resolved by reference to Bennis v Michigan, 516 US 442, 452; 116 S Ct 994; 134 L Ed 2d 68
(1996), a United States Supreme Court case that post-dates other United States Supreme Court cases cited by plaintiffs. In
Bennis, id. at 443, the Court set forth the following summary: "Petitioner was a joint owner, with her husband, of an
automobile in which her husband engaged in sexual activity with a prostitute. A Michigan court ordered the automobile
forfeited as a public nuisance, with no offset for her interest, notwithstanding her lack of knowledge of her husband's activity.
We hold that the Michigan court order did not offend the Due Process Clause of the Fourteenth Amendment or the Takings
Clause of the Fifth Amendment." With regard to the takings argument, the Court stated:
Petitioner also claims that the forfeiture in this case was a taking of private property for public use in violation
of the Takings Clause of the Fifth Amendment, made applicable to the States by the Fourteenth Amendment.
But if the forfeiture proceeding here in question did not violate the [due process requirement of the]
Fourteenth Amendment, the property in the automobile was transferred by virtue of that proceeding from
petitioner to the State. The government may not be required to compensate an owner for property which it
has already lawfully acquired under the exercise of governmental authority other than the power of eminent
domain. [Id. at 452.]
Defendants obtained the property by way of a statutory scheme that did not violate due process. The constitution does not
require them to compensate plaintiffs for the lawfully-obtained property. Id.[5] Plaintiffs' taking argument is without merit.[6]
The trial court did not err in granting defendants summary disposition and in denying plaintiffs' motion for reconsideration.
Affirmed.
SHAPIRO, J. (concurring).
I concur with my colleagues in concluding that constitutional notice was provided and that plaintiffs lack standing to attack
the hearing methodology. I also concur with my colleagues' conclusion that plaintiffs have failed to state a claim in their
constitutional challenge to MCL 211.78g. However, I reach that conclusion through a different analysis.
The challenged statute provides that if a property owner fails to cure a tax delinquency within the time provided, the
individual's entire interest in the property is forfeited to the county treasurer regardless of the amount of the deficiency and
the value of the property. MCL 211.78g. Plaintiffs assert that the statute violates the Fifth Amendment's Takings Clause, and
rely in large measure on the United States Supreme Court decision in US v Lawton, 110 US 146; 3 S Ct 545; 28 L Ed 100
(1884). In that case, the heir of a person, whose property valued at $1,110 was seized in response to a tax delinquency of
$88, which with penalty, interest, and costs had grown to $170.50, sought the difference between the value of the property
and the total tax liability. Id. at 147. The United States Supreme Court stated, "To withhold the surplus from the owner would
be to violate the fifth amendment to the constitution, and deprive him of his property without due process of law or take his
property for public use without just compensation." Id. at 150.
Plaintiffs' argument fails however because the United States Supreme Court later disavowed the constitutional aspect of
Lawton, concluding that it was decided solely on statutory grounds. Nelson v City of New York, 352 US 103, 110; 77 S Ct
195; 1 L Ed 2d 171 (1956). In Nelson, a taxpayer challenged the city's retention of the foreclosure sale proceeds above the
amounts owed for the delinquent taxes. Id. at 109-110. The Supreme Court rejected the challenge stating, "What the City of
New York has done is to foreclose real property for charges four years delinquent and, in the absence of timely action to
redeem or to recovery any surplus, retain the property or the entire proceeds of its sale. We hold that nothing in the Federal
Constitution prevents this where the record shows adequate steps were taken to notify the owners of the charges due and
the foreclosure proceedings." Id. at 110 (emphasis added). The ruling of the United States Supreme Court rejecting a
constitutional challenge to such statutes appears clear and unequivocal.
My colleagues also affirm the dismissal of plaintiffs' claims, but rather than relying on Nelson, conclude, erroneously I
believe, that this case is controlled by Bennis v Michigan, 516 US 442, 452; 116 S Ct 994; 134 L Ed 2d 68 (1996), which
addressed forfeiture of property involved with, or resulting from, criminal activities. By resting solely on Bennis, the majority
implicitly concludes that all "forfeitures" are equal under the law, whether based upon a criminal enterprise or a property
owner's failure to pay $8.41 in taxes. I respectfully disagree, and suggest that the substance and not the nomenclature
should control. I think that this case bears little, if any, relation to Bennis, and that it is a mistake to conclude that Bennis
addresses, let alone controls, the issues in this case.[1]
Despite my concurrence, I recognize that plaintiffs' claims call out for relief.[2] Although Rafaeli LLC's federal court suit was
dismissed on jurisdictional grounds, Judge Berg recognized the need for some action in his opinion:
It cannot be denied that the concept of the state confiscating all of the equity of a citizen's property, worth
between $24,500 and $70,000, and selling it and keeping the entire proceedsall to collect $8.41 in
property taxes and $277.40 in interest and fees, is a manifest injustice that should find redress under the law.
Property taxes must be paid, but for the County Treasurer to reap such an overwhelming windfall by
depriving a property owner of his entire interest in the property, and gain tens of thousands of dollars more
than the tax bill ever was, looks more like an abuse of power than like a local government's reasonable
measures to ensure the collection of property taxes. . . . [Rafaeli, LLC v Wayne Co unpublished opinion of
the United States District Court for the Eastern District of Michigan, issued June 4, 2015 (Docket No. 14-
13958), p 3 n 2.]
Similarly, dissenting from the dismissal of a similar case on jurisdictional grounds, Chief Judge Kethledge opined that the
pertinent statute is a "gross injusticeboth equitably, and from the standpoint of the interests protected by takings law. . . ."
Wayside Church v Van Buren Co, 847 F3d 812, 823 (CA 6, 2017) (KETHLEDGE, C.J., dissenting).[3]
In light of the United States Supreme Court's decision in Nelson, I conclude we must reject plaintiffs' claim despite what
appears to be an obvious injustice that requires remedial action. However, until such time as the United States Supreme
Court revisits the issue, it is the Legislature, and not this Court, that must take such action.
[1] Pacific Legal Foundation filed an amicus curiae brief in support of plaintiffs.
[2] The Court in Jones stated, "We hold that when mailed notice of a tax sale is returned unclaimed, the State must take additional
reasonable stops to attempt to provide notice to the property owner before selling his property, if it is practicable to do so." Jones, 547 US at
225.
[3] Although plaintiffs complain of a lack of evidence of a personal visit to Ohanessian's property, they do not address whether it would have
been practicable to do so, and stop short of stating that such a visit would have satisfactorily supplemented the unsuccessful mailings for
purposes of due process.
[4] Plaintiffs complain that discovery had not been completed at the time of the grant of summary disposition, yet also state that "the parties
had stipulated to withholding discovery." At any rate, there was no fair likelihood that further discovery would have yielded any information
allowing for recovery by plaintiffs. Liparoto Construction, Inc v Gen Shale Brick, Inc, 284 Mich App 25, 33; 772 NW2d 801 (2009).
[5] Plaintiffs attempt to distinguish Bennis by stating that it involved an "overt, intentional act of the [d]efendant in taking part in the crime of
pandering." First, the petitioner in Bennis was the wife of the person who was "pandering" and took part in no "overt, intentional act" herself.
See Bennis, 516 US at 443. Second, plaintiffs here also "acted" contrary to the welfare of the state by failing to pay their taxes.
[6] Plaintiffs failed adequately to address an ostensible additional issue, involving the Eight Amendment of the United States Constitution,
set forth in their primary brief and thus have abandoned this issue. See Wilson v Taylor, 457 Mich 232, 243; 577 NW2d 100 (1998)
(discussing inadequate briefing). Plaintiffs mention the issue briefly in footnotes and then, in discussing their takings issue, plaintiffs
undercut their ostensible Eight Amendment claim by stating: "Neither the [c]ourt nor the [t]reasurer has characterized the GPTA's forfeiture
scheme as punishment for a crime. If they had, the law's application to [p]laintiffs and thousands of others would raise other constitutional
issues, like the Eight Amendment's ban on excessive fines." We reject plaintiffs' attempt to revive the issue by way of their reply brief.
Plaintiffs have also abandoned their ostensible issue regarding substantive due process by mentioning it only in passing. Id. Plaintiffs have
also failed adequately to brief an issue relating to unjust enrichment. They complain that the lower court failed to provide a detailed
explanation for its ruling on this issue but then provide insufficient details themselves, setting forth no rules and offering no analysis
regarding the extent to which the GPTA did or did not displace the common law with regard to unjust-enrichment claims.
[1] Looking to civil asset forfeiture as a model for enforcement of taxation laws is unsound for other reasons. First, no other area of the law
seems to draw as much advocacy for reform. See, e.g., Ford, Due Process for Cash Civil Forfeitures in Structuring Cases, 114 Mich L Rev
455 (2015); Kornfeld & De Corso, Uncivil Forfeitures, LA Law 39 (2003); O'Brien, "Caught in the Crossfire": Protecting the Innocent Owner
of Real Property, 65 St John's L Rev 521 (1991). Second, in Bennis, the majority simply deferred to "a long and unbroken line of cases,"
516 US at 446, over the objections of four dissenting justices, while admitting that the "argument that the Michigan forfeiture statute is unfair
because it relieves prosecutors from the burden of separating co-owners who are complicit in the wrongful use of property from innocent
co-owners . . . has considerable appeal. . . ." Id. at 453. The Bennis majority further declined to concern itself with the potential for an asset
of great value to be seized over a trivial criminal violation, on the ground that the case before it did not present such an extreme situation.
Id. at 450-451.
[2] Rafaeli, LLC owed $8.41 in taxes, which with interest amounted to a delinquency of $330 on real property that the city then sold for
$24,000. Ohanessian owed approximately $8,000 in taxes, and the city sold the property for $80,000.
[3] Plaintiffs also point out that Michigan is one of only eleven states that do not return the surplus value of the property to the taxpayer.
However, plaintiffs concede that those states that do require return of the surplus value all do so as a result of legislation, not judicial action.
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US DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

MICHELLE THOMAS, sued in her RESPONSE

OUTSIDE LEGAL COUNSEL PLC CUMMINS MCLOREY DAVIS &

Counsel for Plaintiff ALLAN C. VANDER LAAN (P33893)

RESPONSE IN OPPOSITION TO MOTION TO DISMISS

NOW COMES Plaintiff DONALD FREED, by counsel, and opposes the

motion to dismiss filed by Defendants pursuant to Fed.R.Civ.P. 12(b)(1)

motion and direct Defendants to file an answer forthwith.

amount of taxes and administrative expenses owed to and retained by

Answer: No; Coleman v Dist. of Columbia, 70 F.Supp.3d 58 (DDC 2014)

Coleman v Dist. of Columbia, 70 F.Supp.3d 58 (DDC 2014)

Plaintiff Donald Freed is a resident of the County of Gratiot in the State

of Michigan and owned Parcel No. 13-026-006-10 commonly known as 7706

which rests on approximately 35 acres of land. Id., 8. It was worth

approximately $97,000.00 by the Countys own records. Id., 10.

It is undisputed that Plaintiff Donald Freed then owed a mere $735.43

to total $1,109.06. Id., 11. Defendant MICHELLE THOMAS sought and

County of Gratiot seizing the entire property ownership interests of Plaintiff

from the proceeds. However, Defendant MICHELLE THOMAS and

Defendant COUNTY OF GRATIOT refused to return the excess equity

interest of $1,109.06 and have appropriated real propertys equity worth

taxing scheme, Plaintiff Donald Freed brought a two-count complaint in this

owed. He is not seeking to have this Court recalculate, refigure, or re-

determine the amount of this taxes. Instead, he asserts that Defendants

MICHELLE THOMAS and COUNTY OF GRATIOT, acting under the color of

law of the State of Michigan, subjected Plaintiff Donald Freed to the

deprivation of rights, privileges, or immunities secured by the Constitution,

Eighth Amendment as a violative excessive fine. This Court has original

color of any State law, statute, ordinance, regulation, custom or usage, of

any right, privilege or immunity secured by the Constitution of the United

States. 28 U.S.C. 1343(a)(3). The Defendants moved to dismiss this

constitutional challenge on the grounds that this Court lacks jurisdiction to

decide issues of constitutional law. This opposition now follows.

Columbia, 70 F.Supp.3d 58 (2014) and Rafaeli LLC v Oakland County, No.

are attached hereto. These cases are addressed herein.

TAX INJUNCTION ACT

Injunction Act applies. The TIA states:

28 U.S.C. 1341. The statute has limited applicability to deprive federal

(2015)(rejecting field preclusion argument and held TIA is limited to certain

class of tax-related actions). While it is a legal vehicle to limit drastically

federal district court jurisdiction to interfere with so important a local concern

(2) to stop taxpayers, with the aid of a federal injunction, from

must disrupt the collection of revenue by operat[ing] to reduce the flow of

Supreme Court in Hibbs concluded that:

Congress trained its attention on taxpayers who sought to avoid paying

cases in which state taxpayers seek federal-court orders enabling them to

only claims in which state taxpayers seek federal-court orders enabling

them to avoid paying state taxes.).

of $1,109.06, or enjoin the assessment, levy, or collection of any tax, but

seeking to enjoin, suspend, or restrain the same before it occurs or to

of $1,109.06 results in the illegal seizure of excessive property interests (i.e.

District Judge Sullivan in Coleman Through Bunn v Dist. of Columbia, 70

F.Supp.3d 58 (DDC 2014) in applying these argumentsa near identical

surplus equity case. Coleman is eerily identical to the circumstances in this

the state actors argument:

removed from the Countys coffersit undisputedly keeps the $1,109.06.

expenses or penalties owed; or the right of the [governments] taxing

authorities to foreclose on his property to recover that debt; [a]ll he

correct certain constitutional wrongs. This Court is requested to follow the

does not bar this Courts jurisdiction.

The Plain, Speedy, Efficient Remedy Exception

To the extent this Court would reject the well-reasoned holding of